Perseus gold projections on target: More drilling planned

While all mines fell short of broker expectations on the production front in the September quarter, Perseus Mining’s (ASX: PRU) CEO Jeff Quartermaine used this week’s AGM to reassure investors of several noteworthy events embedded within its recent performance.

Despite a litany of ongoing challenges, including operational issues at both Sissingue and Edikan, and an uncertain operating environment, Quartermaine’s mood was decidedly upbeat about the company’s fortunes.

He reminded investors that completing the development and commissioning of the company’s third gold mine, Yaouré – a low-cost operation on the Ivory Coast - ahead of schedule and under budget was the highlight of the year for Perseus.

Production up

Largely due to additional contribution from Yaouré, which supplemented production from established operations at Sissingué and Edikan, Perseus produced nearly 330,000 ounces of gold in FY21 from its three operating mines, up 27% on FY20.

Quartermaine believes the company can materially increase its inventory of Mineral Resources and Ore Reserves to maintain the company’s targeted gold production levels of 500,000 ounces of gold annually.

While slightly higher than the cost incurred in the prior financial year, the all-in site cost of US$1,016 per ounce, was well in line with guidance.

Quartermaine also used the AGM to appease investor anxiety that Perseus will “miss the boat” in the area of consolidation.

No missed opportunities

“We have not missed any opportunities that we have set our sights on in the past and the results of our selectivity speak for themselves,” Quartermaine noted.

“Look no further than the value created for all shareholders by the acquisition of Amara and its Yaouré Project several years ago.”

In the year ahead, management’s primary focus is on organic growth activities including more exploration and drilling adjacent to our existing infrastructure and evaluating new opportunities for inorganic growth through acquisition.

Revenue & earnings growth

At FY21 Perseus delivered 15% revenue growth on the previous year to $680m, 11% underlying earnings growth to $303m, and 48% profit after tax growth to $139m. 

While the stock’s share price is up 48% over 12 months at $1.67, it is still trading well below the 52-week high recorded mid-November.

Morningstar has a fair value on Perseus of $1.69, and the consensus recommendation is Strong Buy, with a price target of $1.84.

The company is aiming to pay a 1% dividend yield annually.