Perseus gives green light to finance plan for $264m Yaouré gold project

PERSEUS Mining is to press ahead with a finance plan for its Yaouré gold project in Côte d’Ivoire, the capital cost of which has been confirmed at $264m, including contingencies. This follows completion of a front-end engineering and design (FEED) study.

“With this estimate now in hand we can confidently advance the implementation of our finance plan which involves the deployment of a debt funding package to complement a combination of existing cash reserves,” said Jeff Quartermaine, MD of Perseus Mining.

The FEED study essentially confirms previous findings a year ago in terms of a definitive feasibility study which, in addition to the capital cost, estimated an internal rate of return from Yaouré of 27% with a 32-month payback. This assumes an average gold price of $1,250/oz. The gold price has bounced between $1,350 and $1,150/oz this year.

Yaouré will be Perseus’ third gold mine following the development of Sissingué, also in Côte d’Ivoire, and Edikan, a mine in Ghana, which Perseus ‘inherited’ following the acquisition of Amara Mining, a firm once listed in the United Kingdom. Yaouré is expected to have an initial 8.5 year mine life with opportunities for extension.

Perseus reported gold production of 255,916 ounces for the 2018 financial year ended June 30 and has estimated production and cost guidance for the December 2018 half year at 130,000 to 150,000 oz of gold at an all-in sustaining cost of $950 to $1,150/oz. Perhaps as importantly, Perseus had generated net cash of $66.5m at the half-year mark.

The ability of Perseus’ two operating mines to generate cash is an integral part of financing Yaouré. Quartermaine said that expected future cash flow from our two existing operations – both of which were “… performing in line with internal expectations and contributing to a steady build in our net cash reserves …” – were part of the finance plan.

Based on Perseus’ current plans, first gold from Yaouré is expected to be produced in December 2020. Shares in the company have been relatively volatile this year: after peaking at some 50 Australian cents per share mid-April, the share sank back to its position at the start of the 12-month period of about 38 Australian cents giving the company a market capitalisation of A$388m.