DECEMBER 2021 QUARTER REPORT Perseus achieves record production and operating cashflow
25 JANUARY 2022
NEWS RELEASE
DECEMBER 2021 QUARTER REPORT
Perseus achieves record production and operating cashflow
PERTH, Western Australia, January 25, 2022/Perseus Mining Limited (“Perseus” or the “Company”) (TSX & ASX: PRU) reports on its activities for the three months’ period ended December 31, 2021 (the “Quarter”).
| CALENDAR | JUNE 2021 | SEPTEMBER | DECEMBER | DECEMBER 2021 | CALENDAR | ||
|---|---|---|---|---|---|---|---|
| PERFORMANCE INDICATOR | UNIT | ||||||
| 2020 YEAR | HALF YEAR 1 | 2021 QUARTER | 2021 QUARTER | HALF YEAR | 2021 YEAR 1 | ||
| Gold recovered Ounces | 260,045 | 191,246 | 112,786 | 128,378 | 241,164 432,410 | ||
| Gold poured Ounces | 257,592 | 191,510 | 110,535 | 126,948 | 237,483 428,993 | ||
| Production Cost US$/ounce | 871 | 894 | 857 | 823 | 839 863 | ||
| All-In Site Cost (AISC) US$/ounce | 1,002 | 1,030 | 966 | 934 | 949 985 | ||
| Gold sales Ounces | 265,127 | 194,114 | 107,650 | 130,486 | 238,136 432,250 | ||
| Average sales price US$/ounce | 1,579 | 1,6421 | 1,655 | 1,669 | 1,663 1,653 | ||
| Notional Cashflow US$ million | 150.0 | 103.31 | 77.8 | 94.0 | 171.8 275.11 |
Notes: 1. Includes Yaouré cost and sales data from 31 March 2021 following declaration of Commercial Production.
- Key Operating highlights include:
- Gold production increased 14% quarter-on-quarter to 128,378 ounces or 66% year-on-year to 432,410 ounces.
- Weighted average AISCs decreased by 3% or US$32 quarter-on-quarter to US$934 per ounce or 5% year-onyear to US$985 per ounce.
- Gold production of 241,164 ounces and AISC of US$949 per ounce, comfortably achieved market guidance for the December Half Year of 225 - 255,000 ounces of gold at US$925 -1,025 per ounce.
- Quarterly gold sales increased by 21%, giving a 63% increase in year-on-year gold sales to 432,250 ounces.
- Average quarterly cash margin of US$735 per ounce of gold was US$46 more than prior quarter.
- Notional cashflow from operations increased by 21% quarter-on-quarter to US$ 94.0 million, and 84% yearon-year to $275.1 million.
- Operating performance consistently in line with ESG KPIs.
- Perseus’s strong operating performance is forecast to continue with production of 230,000 to 265,000 ounces at an ASIC of US$915 to US$1,085 per ounce planned in the June 2022 Half Year, translating to 471,000 to 506,000 ounces at an ASIC of US$932 to US$1,020 per ounce for the full 2022 Financial Year.
- Business development activities continued to deliver encouraging results, demonstrating potential to materially increase Perseus’s Ore Reserves inventory and extend the economic mine lives of its operations:
- Exploration programmes on the Nkosuo prospect near Edikan and the CMA Underground prospect at Yaouré both returned excellent drill results, confirming the potential for strong organic growth of each mine.
- Assessment of inorganic growth opportunities continue to generate encouraging results.
- Perseus’s financial position continues to strengthen with available cash and bullion of US$212 million (A$292 million), debt of US$50 million (A$68 million), and net cash of US$162 million (A$269 million) at 31
| PERSEUS MINING LIMITED | |
|---|---|
| Level 2, 437 Roberts Road, Subiaco WA 6008 | |
| ABN: 27 106 808 986 | 1 |
December 2021, after returning US$13 million (A$18 million) of capital to shareholders, reducing debt by US$50 million (A$68 million) and investing US$11 million (A$15 million) in organic growth during the quarter.
OPERATIONS
QUARTERLY PRODUCTION, COSTS AND NOTIONAL CASHFLOW
Perseus’s three operating gold mines, Yaouré and Sissingué in Côte d’Ivoire, and Edikan in Ghana have combined to produce a total of 128,378 ounces of gold in the December 2021 quarter, 14% more than in the prior quarter. The weighted average production cost at the operations was US$823 per ounce, while the weighted average AISC incurred during the quarter was US$934 per ounce of gold. Production costs and AISC’s were 4% and 3% respectively, lower than comparative costs in the previous quarter.
This performance contributed to Half Yearly gold production at our three mines of 241,164 ounces of gold, produced at an average AISC of US$949 per ounce. This strong performance compared favourably to market guidance for the Half Year of 225,000 to 255,000 ounces of gold produced at an AISC of US$925 to 1,025 per ounce and has positioned Perseus to achieve our corporate objective of producing more than 500,000 ounces of gold at a margin of greater than US$400 per ounce in FY2022.
Table 1: Cost and Production Summary by Mine
| TOTAL GOLD PRODUCED (OUNCES) | ALL-IN SITE COST (US$/OUNCE) | |||||
|---|---|---|---|---|---|---|
| MINE | SEPTEMBER | DECEMBER 2021 | DECEMBER 2021 | SEPTEMBER | DECEMBER 2021 | DECEMBER 2021 |
| 2021 QUARTER | QUARTER | HALF YEAR | 2021 QUARTER | QUARTER | HALF YEAR | |
| Yaouré 64,558 | 75,189 | 139,747 671 | 700 | 687 | ||
| Edikan 32,161 | 35,124 | 67,285 1,574 | 1,450 | 1,509 | ||
| Sissingué 16,067 | 18,065 | 34,132 931 | 905 | 917 | ||
| Perseus Group | 112,786 | 128,378 | 241,164 | 966 | 934 | 949 |
Combined gold sales from all three operations totalled 130,486 ounces, 21% more than last quarter. The weighted average gold price realised was US$1,669 per ounce, slightly better than the price received in the September 2021 quarter. Perseus’s average cash margin for the December 2021 quarter was US$735 per ounce, US$46 per ounce or 7% more than that achieved during the September 2021 quarter. Notional operating cashflow from operations was US$94.3 million, US$16.5 million or 21% more than that generated in the prior period, driven by quarter-on-quarter production growth of 14%, derived largely from improved production performance at all three mines, combined with improved AISCs at Sissingué and Edikan.
Table 2: Realised Gold Price and Notional Cash Flow by Mine
| REALISED GOLD PRICE | NOTIONAL CASH FLOW FROM OPERATIONS | |||||
|---|---|---|---|---|---|---|
| (US$ PER OUNCE) | (US$ MILLION) | |||||
| MINE | ||||||
| SEPTEMBER | DECEMBER 2021 | DECEMBER 2021 | SEPTEMBER | DECEMBER 2021 | DECEMBER 2021 | |
| 2021 QUARTER | QUARTER | HALF YEAR | 2021 QUARTER | QUARTER | HALF YEAR | |
| Yaouré 1,690 | 1,699 | 1,695 | 65.8 | 75.1 | 140.9 | |
| Edikan 1,602 | 1,613 | 1,608 | 0.9 | 5.7 | 6.6 | |
| Sissingué 1,624 | 1,638 | 1,631 | 11.1 | 13.2 | 24.3 | |
| Perseus Group | 1,655 | 1,669 | 1,663 | 77.8 | 94.0 | 171.8 |
YAOURÉ GOLD MINE, CÔTE D’IVOIRE
During the quarter, Perseus’s newest mine, Yaouré, increased its gold production by a further 16% compared to the prior quarter to 75,189 ounces of gold at a production cost of US$589 per ounce and an AISC of US$700 per ounce.
The weighted average sales price of the 79,669 ounces of gold sold during the quarter was US$1,699 per ounce, giving rise to a cash margin of US$999 per ounce. Notional operating cashflow generated by Yaouré was US$75.1 million during the quarter, US$9.3 million more than in the September 2021 quarter. Refer to Table 3 below for details of operating and financial parameters.
This performance contributed to half yearly gold production at Yaouré of 139,747 ounces of gold, produced at an average AISC of US$687 per ounce which compared favourably to market guidance for the half year of 130,000 to 140,000 ounces of gold produced at an AISC of US$675 to US$775 per ounce.
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The improving operating performance at Yaouré was a result of strong operating fundamentals compared to the prior quarter, including mill throughput rates (487 tph compared to 449 tph), gold recovery rates (93.6% compared to 92.7%) and importantly, the head grade of processed ore (2.64 g/t to 2.37 g/t).
Table 3: Yaouré Quarterly Performance
| CALENDAR | JUNE 2021 | SEPTEMBER | DECEMBER | DECEMBER 2021 | 2021 CALENDAR | ||
| PARAMETER | UNIT | 2020 YEAR | HALF YEAR 2 | 2021 | 2021 | HALF YEAR | YEAR TO DATE 2 |
| QUARTER | QUARTER | ||||||
| Gold Production & Sales | |||||||
| Total material mined Tonnes 6,449,440 16,979,488 6,340,478 | 9,870,283 | 16,210,761 33,190,249 | |||||
| Total ore mined Tonnes 128,148 659,620 1,070,285 | 1,378,535 | 2,448,820 3,108,440 | |||||
| Average ore grade g/t gold 0.78 1.23 2.07 | 1.98 | 2.02 1.85 | |||||
| Strip ratio t:t 49.3 24.74 4.92 | 6.16 | 5.62 9.68 | |||||
| Ore milled Tonnes 122,545 1,462,177 913,530 | 946,052 | 1,859,582 3,321,759 | |||||
| Milled head grade g/t gold 1.01 1.40 2.37 | 2.64 | 2.51 2.02 | |||||
| Gold recovery % 67.7 90.01 92.7 | 93.6 | 93.2 92.3 | |||||
| Gold produced ounces 2,687 59,438 64,558 | 75,189 | 139,747 199,185 | |||||
| Gold sales1 ounces - 54,182 60,055 | 79,669 | 139,724 193,906 | |||||
| Average sales price US$/ounce - 1,692 1,690 | 1,699 | 1,695 1,694 | |||||
| Unit Production Costs | |||||||
| Mining cost US$/t mined - 2.71 2.95 | 2.56 | 2.71 2.71 | |||||
| Processing cost US$/t milled - 9.90 13.74 | 13.52 | 13.63 11.99 | |||||
| G & A cost US$M/month - 1.70 1.89 | 2.08 | 1.99 1.89 | |||||
| All-In Site Cost | |||||||
| Production cost US$/ounce - 951 572 | 589 | 581 659 | |||||
| Royalties US$/ounce - 83 85 | 90 | 87 86 | |||||
| Sub-total US$/ounce - 1,033 657 | 679 | 669 745 | |||||
| Sustaining capital US$/ounce - 3 14 | 21 | 18 15 | |||||
| Total All-In Site Cost3 US$/ounce - 1,036 671 | 700 | 687 760 | |||||
| Notional Cashflow from Operations2 | |||||||
| Cash Margin US$/ounce - 648 1,019 | 999 | 1,008 934 | |||||
| Notional Cash Flow US$M - 24.2 65.8 | 75.1 | 140.9 165.1 |
Notes:
1. Gold sales are recognised in Perseus’s accounts when gold is delivered to the customer from Perseus’s metal account
2. Includes Yaouré data from declaration of Commercial Production on 31 March 2021.
3. Included in the AISC for the quarter is US$6.91 million of costs relating to excess waste stripping. When reporting cost of sales, in line with accepted practice under IFRS, this cost will be capitalised and the costs amortised over the remainder of the relevant pit life.
MINERAL RESOURCE TO MILL RECONCILIATION
The reconciliation of processed ore tonnes, grade and contained gold relative to the Yaouré Mineral Resource block model are shown in Table 4. During the last quarter, 17% more ore tonnes at 10% lower grade for 6% more ounces have been produced compared to the Mineral Resource model. Over the last six months and project to-date, Yaouré has produced more metal than predicted by the Mineral Resource model. The performance of the Yaouré Mineral Resource model to date is considered satisfactory, however work will continue to optimise the grade and reduce dilution.
Table 4: Yaouré Block Model to Mill Reconciliation
| BLOCK MODEL TO MILL CORRELATION FACTOR | |||
|---|---|---|---|
| PARAMETER | PROJECT | ||
| 3 MONTHS | 6 MONTHS | TO DATE | |
| Tonnes of Ore | 117% | 114% 109% | |
| Head Grade | 90% | 97% 99% | |
| Contained Gold | 106% | 110% 108% |
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SISSINGUÉ GOLD MINE, CÔTE D’IVOIRE
During the quarter, 18,065 ounces of gold were produced at Sissingué at a production cost of US$817 per ounce and an AISC of US$905 per ounce. The weighted average sales price of the 16,621 ounces of gold sold during the quarter was US$1,638 per ounce, giving rise to a cash margin of US$732 per ounce. Notional cashflow generated from the Sissingué operation totalled US$13.2 million for the quarter, US$ 2.1 million more than in the prior quarter, due to a combination of improved production, costs and average gold sale prices. Refer to Table 5 below for details of operating and financial parameters.
This performance contributed to half yearly gold production at Sissingué of 34,132 ounces of gold, produced at an average AISC of US$917 per ounce. This outstanding performance materially exceeded market guidance for the half year of 25,000 to 30,000 ounces of gold produced at an AISC of US$950 to US$1,070 per ounce.
The overall result for the quarter at Sissingué, was also better than forecast by Perseus with each of the key operating parameters including runtime (95%), throughput rate (178 tph), and recovery (90%) improving relative to the prior quarter. Average head grade (1.67g/t) was down relative to the prior quarter in line with company expectations.
Table 5: Sissingué Quarterly Performance
| CALENDAR | JUNE 2021 | SEPTEMBER | DECEMBER | DECEMBER | CALENDAR | ||
|---|---|---|---|---|---|---|---|
| PARAMETER | UNIT | ||||||
| 2020 YEAR | HALF YEAR | 2021 QUARTER | 2021 QUARTER | 2021 HALF YEAR | 2021 YEAR | ||
| Gold Production & Sales | |||||||
| Total material mined Tonnes 5,144,335 1,738,136 395,727 | 706,459 | 1,102,186 2,840,322 | |||||
| Total ore mined Tonnes 1,681,633 851,552 162,912 | 186,063 | 348,975 1,200,527 | |||||
| Average ore grade g/t gold 2.20 2.13 1.52 | 0.87 | 1.17 1.85 | |||||
| Strip ratio t:t 2.1 1.0 1.4 | 2.8 | 2.2 1.4 | |||||
| Ore milled Tonnes 1,349,807 596,416 299,757 | 375,615 | 675,372 1,271,788 | |||||
| Milled head grade g/t gold 2.41 2.70 1.91 | 1.67 | 1.78 2.23 | |||||
| Gold recovery % 94.9 92.6 87.1 | 89.8 | 88.5 90.9 | |||||
| Gold produced ounces 99,268 48,763 16,067 | 18,065 | 34,132 82,895 | |||||
| Gold sales1 ounces 95,765 55,519 18,250 | 16,621 | 34,870 90,389 | |||||
| Average sales price US$/ounce 1,606 1,670 1,624 | 1,638 | 1,630 1,655 | |||||
| Unit Production Costs | |||||||
| Mining cost US$/t mined 4.72 6.20 9.62 | 6.80 | 7.81 6.80 | |||||
| Processing cost US$/t milled 15.98 18.8 19.4 | 16.90 | 18.01 18.40 | |||||
| G & A cost US$M/month 1.05 1.05 1.24 | 1.20 | 1.22 1.14 | |||||
| All-In Site Cost1 | |||||||
| Production cost US$/ounce 589 580 830 | 817 | 823 680 | |||||
| Royalties US$/ounce 79 107 94 | 85 | 89 100 | |||||
| Sub-total US$/ounce 668 687 924 | 902 | 912 780 | |||||
| Sustaining capital US$/ounce 24 28 7 | 3 | 5 18 | |||||
| Total All-In Site Cost US$/ounce 692 715 931 | 905 | 917 798 | |||||
| Notional Cashflow from Operations1 | |||||||
| Cash Margin US$/ounce 927 956 693 | 732 | 713 856 | |||||
| Notional Cash Flow US$M 92.0 46.6 11.1 | 13.2 | 24.3 71.0 |
Notes: 1. Gold sales are recognised in Perseus’s accounts when gold is delivered to the customer from Perseus’s metal account.
MINERAL RESOURCE TO MILL RECONCILIATION
The reconciliation of processed ore tonnes, grade and contained ounces relative to the Sissingué Mineral Resource block model is in Table 6 below. During the last three months, grade control has predicted similar tonnes (100%) grade (99%) and ounces (99%) when compared to the Mineral Resource Estimate (MRE). Over the last six- and 12-month periods of operation, Sissingué has produced more metal than predicted by the Mineral Resource model. Perseus regards the overall outperformance as being within normal industry standards.
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Table 6: Sissingué Block Model to Mill Reconciliation
| BLOCK MODEL TO MILL CORRELATION FACTOR | |||
|---|---|---|---|
| PARAMETER | |||
| 3 MONTHS | 6 MONTHS | 1 YEAR | |
| Tonnes of Ore | 100% | 116% 108% | |
| Head Grade | 99% | 105% 103% | |
| Contained Gold | 99% | 121% 107% |
UPDATED LIFE OF MINE PLAN FOR THE SISSINGUÉ OPERATION
An updated Life of Mine Plan for the Sissingué operation that models the mining and processing of ore from each of the Sissingué, Fimbiasso and the yet to be granted, Bagoé exploitation permit areas, is being prepared and will be published in the June 2022 quarter when the results of a recent successful drilling campaign in and around the existing Sissingué pits are fully collated, understood and incorporated into the revised mine plan and processing schedule.
Based on preliminary optimisations and scheduling, it indicates that the life of the Sissingué operation could be extended by several years. Current work is focusing on the sequencing of mining to optimise the return on the investment of capital required to access the new mining areas.
BAGOÉ MINING LEASE
Work by consultants (CECAF), on preparing an Environmental and Social Impact Assessment (ESIA) for the Bagoé exploration permit area was completed during the quarter. The ESIA has been lodged with the environmental regulator (ANDE) for approval. Once approval is granted, it will be lodged with the Department of Mines, Petroleum and Energy together with the recently completed Definitive Feasibility Study of an operation located on the Bagoé exploration permit. This is expected to occur during the June 2022 quarter and an Exploitation Permit should be granted once assessment of the submissions is complete.
EDIKAN GOLD MINE, GHANA
In the December 2021 quarter, Perseus produced 35,124 ounces of gold at Edikan (9% more than in the September quarter) at a production cost of US$1,327 per ounce and an AISC of US$1,450 per ounce. Gold sales of 34,196 ounces were 17% more than in the prior quarter, at a weighted average realised gold price of US$1,613 per ounce. This generated a cash margin of US$163 per ounce, a significant improvement on the prior quarter. Notional cashflow of US$5.7 million, was US$4.8 million better than in the prior period. Table 7 below summarises the key operating and financial parameters.
While the overall performance of Edikan was materially better than in the September quarter, there is still significant room for improvement. Signs of this improvement were evident in the month of December when the mill feed was made up predominantly of ore from the AG Pit which resulted in the head grade of ore treated increasing sharply to 0.86g/t on average and the gold recovery rate increasing to 86.2%.
This quarterly performance contributed to Half Yearly gold production at Edikan of 67,285 ounces of gold, produced at an average AISC of US$1,509 per ounce. This performance fell short of market guidance for the Half Year of 70,000 to 80,000 ounces of gold produced at an AISC of US$1,350 to 1,450 per ounce.
The shortfall in production relative to guidance was a function of several factors including poor reconciliation of tonnes and grade of ore mined from the AG pit in the September 2021 quarter and a conscious decision by Perseus to process ore from low grade ore stockpiles during the December quarter until a comprehensive grade control programme could be completed to provide a thorough understanding of the distribution of gold bearing material in the upper benches of the pit. As noted above, in December a marked improvement in head grade and recovery of ore had been achieved giving confidence in forecasts for future periods.
Table 7: Edikan Quarterly Performance
| CALENDAR | JUNE 2021 | SEPTEMBER | DECEMBER | DECEMBER | CALENDAR | ||
|---|---|---|---|---|---|---|---|
| PARAMETER | UNIT | ||||||
| 2020 YEAR | HALF YEAR | 2021 QUARTER | 2021 QUARTER | 2021 HALF YEAR | 2021 YEAR | ||
| Gold Production & Sales | |||||||
| Total material mined Tonnes 27,056,108 14,829,935 7,823,678 | 7,589,717 | 15,413,395 30,243,330 | |||||
| Total ore mined Tonnes 4,379,485 1,968,783 788,612 | 836,266 | 1,624,878 3,593,661 | |||||
| Average ore grade g/t gold 1.24 1.08 0.92 | 0.90 | 0.91 1.01 | |||||
| Strip ratio t:t 5.2 6.5 8.9 | 8.1 | 8.5 7.4 | |||||
| Ore milled Tonnes 6,787,946 3,280,435 1,731,146 | 1,756,072 | 3,487,218 6,767,653 |
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| CALENDAR | JUNE 2021 | SEPTEMBER | DECEMBER | DECEMBER | CALENDAR | ||
|---|---|---|---|---|---|---|---|
| PARAMETER | UNIT | ||||||
| 2020 YEAR | HALF YEAR | 2021 QUARTER | 2021 QUARTER | 2021 HALF YEAR | 2021 YEAR | ||
| Milled head grade g/t gold 1.01 0.93 0.72 | 0.73 | 0.73 0.82 | |||||
| Gold recovery % 71.7 85.0 80.2 | 85.6 | 83.0 84.1 | |||||
| Gold produced ounces 158,090 83,045 32,161 | 35,124 | 67,285 150,330 | |||||
| Gold sales1 ounces 169,362 84,412 29,345 | 34,196 | 63,541 147,953 | |||||
| Average sales price US$/ounce 1,564 1602 1,602 | 1,613 | 1,608 1,604 | |||||
| Unit Production Costs | |||||||
| Mining cost US$/t mined 3.13 3.22 3.36 | 3.45 | 3.41 3.32 | |||||
| Processing cost US$/t milled 9.05 9.60 8.56 | 8.23 | 8.39 8.98 | |||||
| G & A cost US$M/month 1.64 1.39 1.78 | 2.04 | 1.89 1.63 | |||||
| All-In Site Cost2 | |||||||
| Production cost US$/ounce 1,048 1,054 1,445 | 1,327 | 1,383 1,201 | |||||
| Royalties US$/ounce 107 106 98 | 105 | 102 104 | |||||
| Sub-total US$/ounce 1,155 1,160 1,543 | 1,432 | 1,485 1,305 | |||||
| Sustaining capital US$/ounce 42 53 32 | 18 | 24 40 | |||||
| Total All-In Site Cost2 US$/ounce 1,197 1,213 1,574 | 1,450 | 1,509 1,345 | |||||
| Notional Cashflow from Operations1 | |||||||
| Cash Margin US$/ounce 370 389 28 | 163 | 98 259 | |||||
| Notional Cash Flow US$M 58.4 32.3 0.9 | 5.7 | 6.6 38.9 |
Notes:
1. Gold sales are recognised in Perseus’s accounts when gold is delivered to the customer from Perseus’s metal account.
2. Included in the AISC for the quarter is US$8.49 million of costs relating to excess waste stripping. When reporting cost of sales, in line with accepted practice under IFRS, this cost will be capitalised and the costs amortised over the remainder of the relevant pit life.
MINERAL RESOURCE TO MILL RECONCILIATION
The disconnect in the Edikan reconciliation has been analysed in detail to understand the performance to ensure that the trend will not continue in the Stage 3 cutback of the AG Pit. From the work undertaken, it is apparent that the large block size in the resource model (20 metres x 20 metres x 10 metres) is the cause of the issue whilst mining around an existing cutback void. Material that is present in the large block has already been partially mined in the previous Stage 2 pit, which was the higher-grade part of the large block. Overall, the pit continues to reconcile well, however this section of the cutback is strongly affected by this circumstance. The pit mining is within 10 metres of reaching the previous cutback base, and from here it is expected the reconciliation will revert to previous correlation of ~95%-105% overall.
Additional drilling has been undertaken this quarter to confirm the continuity of the grade and geology. The drilling assays returned emulated the block model grades giving good confidence in the ongoing cutback ore content and has enhanced the geological model. The Edikan Block Model to mill reconciliation figures are shown in Table 8 below.
Table 8: Edikan Block Model to Mill Reconciliation
| BLOCK MODEL TO MILL CORRELATION FACTOR | |||
|---|---|---|---|
| PARAMETER | |||
| 3 MONTHS | 6 MONTHS | 1 YEAR | |
| Tonnes of Ore | 78% | 87% 89% | |
| Head Grade | 81% | 84% 87% | |
| Contained Gold | 63% | 73% 77% |
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GROUP GOLD PRODUCTION AND COST MARKET GUIDANCE
Table 9: Production and Cost Guidance
| DECEMBER 2021 HALF YEAR | JUNE 20212HALF YEAR | 2022 FINANCIAL YEAR | ||
| PARAMETER | UNITS | |||
| (ACTUAL) | (FORECAST) | (FORECAST) | ||
| Yaouré Gold Mine |
Production Ounces 139,747 130,000 - 140,000 269,747 - 279,747 All-in Site Cost USD per ounce 687 765 to 815 725 to 750
Sissingué Gold Mine
Production Ounces 34,133 25,000 to 35,000 59,133 – 69,133 All-in Site Cost USD per ounce 917 810 to 1,280 872 to 1,100
Edikan Gold Mine
Production Ounces 67,284 75,000 to 90,000 142,284 – 157,284 All-in Site Cost USD per ounce 1,509 1,210 to 1,430 1,350 to 1,465
PERSEUS GROUP
Production Ounces 241,164 230,000 to 265,000 471,164 – 506,164 All-in Site Cost USD per ounce 949 915 to 1,085 932 to 1,020
SUSTAINABILITY
COVID-19 UPDATE
A fourth wave of COVID-19 has spread across West Africa during the quarter, with higher infection rates consistent with the Omicron variant. In response, Perseus continued to update its COVID-19 critical controls, with focus on keeping its people safe and healthy, maintaining safe and stable operations, and supporting host governments and local communities. Although around 190 cases of COVID-19 have been recorded across the Company’s operations since the beginning of the pandemic, no cases have led to serious illness and our controls have been effective in limiting the spread in our workforce.
During the quarter 60 new cases of COVID-19 were recorded, mainly at the Edikan and Yaouré operations and almost all in the month of December. Vaccination campaigns progressed across our operations, and with increased vaccine availability across the region, around 50 per cent of Perseus’s employees and contractors are now fully vaccinated.
Efforts continue to improve vaccination rates as they become available under government programs.
SUSTAINABILITY GOVERNANCE
During the quarter, Perseus continued to strengthen its sustainability governance by:
- Releasing the second Modern Slavery Statement in line with the Australian Modern Slavery Act 2018 (Cth), for the period 1 July 2020 to 30 June 2021, providing further information on the human rights risk profile of Perseus’s global supply chain, and outlining its human rights and modern slavery due diligence program.
- Commencing a global project to transform Perseus’s health and safety approach and performance across the operations in line with international best practice, focusing on leadership, culture, capability and risk management. The work will be delivered throughout the remainder of FY22 and FY23.
- Commencing an independent review of closure plans and cost estimates, to be completed by the end of Q3.
- Updating security risk assessments at Sissingué due to the increased terrorism risks in countries to the north of Côte d’Ivoire associated with activity of Jihadist groups in the Sahel region.
SUSTAINABILITY PERFORMANCE
This quarter, Perseus continued its strong sustainability performance relative to objectives and targets, as shown below in Table 10 and summarised as follows:
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- Safety: Perseus’s record of zero fatalities across the operations was maintained, and safety performance improved significantly from the previous quarter at Edikan and Sissingué, with Total Recordable Injury Frequency Rates (TRIFR) to the end of December 1.36 and 0.0 respectively. The TRIFR across the Group was 1.49, a significant improvement on the September quarter and our FY21 performance, however still higher than our FY22 target of 1.3. Sissingué achieved 1 year without a recordable incident, and Edikan was awarded the Best Performer in Occupational Health and Safety during the 7th Ghana Mining Industry Awards, established by the Ghana Chamber of Mines.
- Social:
- Total economic contribution to Perseus’s host countries of Ghana and Côte d’Ivoire for the financial year to date of around US$223 million (around 60% of revenue), included approximately US$166 million paid to local suppliers, US$21 million paid as salaries and wages to local employees, US$35 million in payments to government as taxes, royalties and other payments, and around US$591,000 in social investment.
- Local and national employment has been maintained at above 95% for the quarter, and local procurement around 81%.
- Zero significant community events occurred.
- Environment:
- Scope 1 and 2 greenhouse gas emissions remained steady from the first quarter. Water intensity increased slightly due to dry season conditions across the region.
- As part of development of Perseus’s emissions reduction strategy, two vendors were shortlisted to support further detailed studies to partially replace the diesel fired back-up generators at Yaouré with solar power.
- Zero environmental events or significant tailings dam integrity issues occurred during the period.
In achieving the above, the following sustainability challenges were encountered by Perseus during the quarter:
- Total Recordable Injury Frequency Rates (TRIFR) at Yaouré increased from 3.24 in the September quarter to 3.49, tracking significantly higher than its FY21 result of 1.59 and higher than its FY22 target of 2.2. Given its performance and the significant work required to embed Perseus’s Health and Safety standards at this new operation, Yaouré will be the primary focus of the Health and Safety improvement program for the remainder of FY22.
- Government administrative delays to the establishment of the Yaouré Community Development Fund, and associated delays to commencement of community projects. Perseus is working with Government to establish the fund as soon as possible, and community funding is being accumulated in an account each month since commercial production was achieved at Yaouré.
- Illegal mining activities on Perseus’s mining and exploration licence areas continues to present challenges for the Company in both Ghana and Côte d’Ivoire. The Company continues to work closely with relevant government authorities to manage these activities that have proven to negatively impact both the environmental and social fabric of local communities.
- Ongoing tensions with the community around Yaouré regarding employment and business opportunities and land compensation.
- Security risks at Sissingué and satellite exploration activity areas (Fimbiasso and Bagoé) are being closely monitored due to ongoing political and social unrest which has given rise to terrorist activities in Mali which lies immediately to the north of the Sissingué mine.
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Table 10: Sustainability Quarterly Performance
| PERFORMANCE DRIVER | SUB-AREA | METRIC | UNIT | FY2021 SEP 2021 QUARTER | DEC 2021 QUARTER | |
|---|---|---|---|---|---|---|
| Governance | Compliance | Material legal non-compliance | Number | 0 | 0 | 0 |
| Social | Worker Health, Safety and | Number | ||||
| Workplace fatalities | 0 | 0 | 0 |
Wellbeing
| Total Recordable Injury Frequency (TRIF) | Total Recordable Injuries per million hours | Edikan - 1.49 | Edikan - 1.89 | Edikan - 1.36 | ||||
|---|---|---|---|---|---|---|---|---|
| worked, rolling 12 months | Sissingué - 1.47 | Sissingué - 0.50 | Sissingué - 0.00 | |||||
| Yaouré - 1.59 | Yaouré - 3.24 | Yaouré - 3.49 | ||||||
| Exploration - 1.92 | Exploration - 2.80 | Exploration - 2.01 | ||||||
| Group - 1.76 | Group - 1.85 | Group - 1.49 | ||||||
| Lost Time Injury Frequency (LTIFR) | Lost Time Injuries (LTIFR) per million hours | Edikan - 0.37 | Edikan - 0.38 | Edikan - 0.39 | ||||
| worked, rolling 12 months | Sissingué - 0.00 | Sissingué - 0.00 | Sissingué - 0.00 | |||||
| Yaouré - 1.59 | Yaouré - 0.991 | Yaouré - 0.76 | ||||||
| Exploration - 0.00 | Exploration - 1.40 | Exploration - 1.00 | ||||||
| Group - 0.45 | Group - 0.46 | Group - 0.46 | ||||||
| COVID-19 Cases | Number | 24 | 66 | 60 | ||||
| Community | Number of significant2community events | Number | 21 | 0 | 0 | |||
| Community investment | US$ | US$2,100,888 | US$310,8991 | US$279,743 | ||||
| Economic Benefit | Proportion local and national employment | % of total employees | 95% | 95% | 96% | |||
| Proportion local and national procurement | % of total procurement | 81% | 74% | 81% | ||||
| Gender Diversity | Board gender diversity | % | 33% | 33% | 33% | |||
| Executive gender diversity | % | 40% | 40% | 40% | ||||
| Proportion of women employees | % | 14.7%3 | 13.8%3 | 12.0%3 | ||||
| Responsible Operations Environment | Number of significant2environmental events | Number | 0 | 0 | 0 | |||
| Tailings | Number of significant2tailings dam integrity failures | Number | 0 | 0 | 0 | |||
| Water stewardship | Water used per ounce of gold produced | M3/oz | 13.8 | 6.91 | 8.05 | |||
| Greenhouse Gas Emissions | Scope 1 and 2 Greenhouse Gas Emissions per ounce of | Tonnes of CO2-e/oz | 0.63 | 0.57 | 0.57 |
gold produced
Notes:
1. Corrected/re-stated figure from the September 2021 Quarter report
2. A significant event is one with an actual severity rating of four and above, based on Perseus's internal severity rating scale (tired from one to five by increasing severity) as defined in our Risk Management Framework
3. Permanent employees only.
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BUSINESS GROWTH
CÔTE D’IVOIRE EXPLORATION
YAOURÉ EXPLORATION & EXPLOITATION PERMITS
Exploration activities during the quarter on the Yaouré exploitation permit focused on drilling at the CMA underground and CMA Down-dip Extension prospects, both within two kilometres of the Yaouré mill. Other programs included auger drilling at Degbezere (Appendix 1 – Figure 1.1). In all, 7,828 metres of RC and 23,398 metres of diamond core were drilled at CMA and CMA Down-dip during the quarter.
Work at the CMA Underground prospect focused on infill drilling to firm up previously defined underground resources extending below the currently planned CMA pit. Perseus defined an Inferred Mineral Resource of 1.8 million tonnes grading 6.1 g/t Au, extending to a maximum 275 metre down dip beneath the open pit resource (refer Resources and Reserves ASX announcement dated 24 August 2021), with potential to extend mineralisation further down dip beyond this (Appendix 1 – Figure 1.2). Perseus has also completed a Scoping Study that identified the potential to mine the CMA structure using underground mining methods (refer to ASX Release ‘Perseus Mining Completes Scoping Study for Potential Underground Mine at Yaouré’ dated 5 November 2018).
Drilling on the CMA structure expanded towards the northern end, beyond the drilling during the previous quarter that focused on the lower grade southern end of the structure due to operational demands. Drilling during the quarter comprised 21,015 metres in 67 Reverse Circulation (“RC”) pre-collared diamond (“DD”) holes, continuing the infill of the existing 50 x 50 metre coverage to a nominal 25 x 25 metre pattern to allow conversion of the Inferred resource to Indicated. Results to date from the infill drilling program have been encouraging, with intercepts generally consistent with those previously encountered in both thickness and grade.
Step-out drilling to investigate the next 300 metre down-dip from the current CMA Underground resource also continued, with 10,211 metres drilled in 18 RC pre-collared DD holes focused in the area around the explosives magazine. The step-out program is guided by the 2020 3D seismic survey that clearly identified the CMA structure extending to depth beyond the current drill coverage. Drilling is being undertaken on an initial 100 x 200 metre pattern to better define the position of the CMA structure and the intensity of mineralisation. If results are encouraging, this will be infilled to 100 x 100 metres to allow an initial Inferred Mineral Resource Estimate. The results from the CMA Underground infill and extension drilling continue to demonstrate the potential for the Company to materially grow its gold inventory at Yaouré organically, as is more fully detailed in the Company’s ASX release dated 19 January 2022 ‘High Grade Results Continue at Perseus’s Yaouré Gold Mine’.
On the Yaouré West exploration permit auger geochemical drilling was undertaken along the Degbezere NE trend, with 732 metres drilled in 81 holes. The augering covers the Degbezere Shear Zone, a structural target identified highlighted in soil geochemistry, airborne geophysical surveys and the 2D seismic line surveyed in 2020.
Results from the Aircore (“AC”) program conducted in the previous quarter were received but with generally negative results.
BAGOÉ EXPLORATION PERMIT
Limited drilling was conducted on the Bagoé permit during the December Quarter, with 4,619 metres drilled in 102 metres of infill AC along the Bagoé Shear Zone at Antoinette South. Assays were received from both this program and from AC and RC drilling completed during the previous quarter at the Veronique South and SE, Juliette, A-J Gap and Brigitte prospects (Appendix 1 – Figures 1.2 & 1.3). The results from these programs were generally disappointing, with mostly narrow, low-grade intercepts being recorded.
In addition to the drilling, ground magnetic surveys were conducted over the Ludivine and Brigitte areas, data from which is being assessed.
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GHANA
AGYAKUSU OPTION
Exploration drilling continued throughout the December quarter at the Nkosuo prospect on the Agyakusu permit north of the Company’s Edikan Gold Mine (Appendix 1 – Figure 1.4). A total of 16,202 metres was drilled in 37 RC holes, five DD holes and 44 RC pre-collared diamond holes (“RD”), bringing the total drilled at Nkosuo since drilling commenced on 1 July 2021 to 24,280 metres in 134 holes. Drilling continued on a nominal 80 x 80 metre grid to scope out the extent and overall geometry of the host granite and contained mineralisation and commenced local infill to 40 x 40 and 40 x 20 metres. As fully reported in the Company’s ASX announcement of 18 January 2022 ‘Perseus Achieves Near-mine Exploration Success in Ghana’, drilling continues to produce highly encouraging results, confirming strong potential for shallow gold resources capable of being mined using open pit methods, just seven kilometres from the Edikan mill.
Drilling now underway at Nkosuo will focus on extending 80 x 80 metre over the still open southern extension of the granite, completing the 40 x 40 metres coverage and ultimately infilling to 40 x 20 metres to support a planned Mineral Resource estimate to be completed early in the June 2022 quarter. Metallurgical testwork and geotechnical drilling has commenced to allow the evaluation of the Ore Reserve potential in the September Quarter of 2022, along with preliminary studies to meet the requirements of the ESIA process.
In anticipation that this work will lead to a positive outcome the Company is in the process of exercising its option over the Agyakusu permit.
AGYAKUSU-DML OPTION
A planned AC drilling program to test gold-in-soil anomalism along the main structural/intrusive corridor extending SW from the Nkosuo prospect on the adjoining Agyakusu permit has been deferred in favour of an initial lower impact auger program (Appendix 1 - Figure 1.4). This work will commence during the next quarter.
DOMENASE OPTION
Planned first-pass soil sampling covering the main structural/intrusive corridors on this property was delayed pending renewal of the permit and finalisation of a new option agreement.
EXPLORATION EXPENDITURE
Expenditure on exploration activities throughout West Africa up to 31 December 2021 is outlined in Table 11 below.
Table 11: Group Exploration Expenditure December Quarter
| CALENDAR | JUNE 2021 | SEPTEMBER | DECEMBER | DECEMBER | CALENDAR | ||
|---|---|---|---|---|---|---|---|
| REGION | UNITS | ||||||
| 2020 YEAR | HALF YEAR | 2021 QUARTER | 2021 QUARTER | 2021 HALF YEAR | 2021 YEAR | ||
| Ghana US$ million 3.03 0.85 2.14 | 4.13 | 6.27 7.12 | |||||
| Côte d’Ivoire | |||||||
| Sissingué US$ million 3.81 4.41 1.10 | 0.53 | 1.63 6.04 | |||||
| Yaouré US$ million 11.65 5.95 4.16 | 6.09 | 10.25 16.20 | |||||
| Regional US$ million 1.27 0.19 0.25 | 0.01 | 0.26 0.45 | |||||
| Sub-total US$ million 16.73 10.55 5.52 | 6.62 | 12.14 22.69 | |||||
| Total West Africa | US$ million | 19.76 | 11.40 | 7.66 | 10.75 | 18.42 | 29.82 |
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GROUP FINANCIAL POSITION
CASHFLOW AND BALANCE SHEET (UNAUDITED)
Perseus achieved yet another strong quarter of cash generation, with a US$66.0 million increase in its overall net cash position (or cash plus bullion less interest-bearing debt) relative to the prior quarter. The Yaouré Gold Mine continued its strong cash generation performance, with comparable performance to Q1 achieved by Sissingué and a noticeable improvement by Edikan.
Based on the spot gold price of US$1,820.1 per ounce and an A$:US$ exchange rate of 0.726267 at 31 December 2021, the total value of cash and bullion on hand at the end of the quarter was A$292.0 million, (US$212.1 million)
including cash of A$268.6 million (US$195.1 million) and 9,342 ounces of bullion on hand, valued at A$23.4 million (US$17.0 million). A debt repayment of A$68.3 million (US$50.0 million) was made during the quarter, reducing the principal amount owing to US$50.0 million.
The graph below (Figure 1) shows the notional operating cash flows from the three mines, the largest single driver of cash movement, and how this compares historically over the past 2 years. Note that “Notional Operating Cash Flow” is obtained by multiplying average sales price less AISC (the “notional margin”) by the ounces of gold recovered.
Figure 1: Notional Operating Cashflow
The overall movement in cash and bullion during the quarter is shown below in Figure 2. Aside from the operating
| , Australian and West African corporate costs | |
| A$3.9 million), tax instalment |
(A$1.1 million), and a dividend payment to our shareholders (A$18.2 million).
Figure 2: Quarterly Cash and Bullion Movements
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