Perseus Mining to pass on gold sector M&A, opting for short- to mid-term organic growth

Jeff Quartermaine, CEO & MD, Perseus Mining

PERSEUS Mining was unlikely to step into merger and acquisition activity this year, preferring instead to press ahead with short- and medium-term organic growth options.

The improvement in the gold price over the last two years and the premium placed on prospective resources or companies producing cash flow meant there was little value to be had compared to the firm’s organic growth pipeline, said Jeff Quartermaine, CEO & MD of Perseus Mining in a second quarter presentation earlier today.

“We are not pinning our hopes it (M&A activity) in the near future. But we are not rocking back on our heels and wondering what to do next,” he added.

From now until the end of the June quarter, Perseus would focus on replacing ore and resources at its operations located in Côte d’Ivoire and Ghana. “After June we have got some large targets close to our operating mines,” said Quartermaine.

These included an underground section at Yaouré, the firm’s newly commissioned Côte d’Ivoire project which poured first gold on December 17, some five weeks ahead of budget. The $265m project will ramp up to a nameplate capacity of about 215,000 ounces a year.

“We have the platform to produce 500,000 ounces of gold a year,” said Quartermaine of the impact of Yaouré. “It is only a matter of time before the value in Perseus is recognised by the broader market,” he said.

Perseus produced 137,386 oz in the first half of its 2021 financial year, up 12% on the June 2020 half year, and close to the top end of the production guidance range of 125,500 – 139,000 oz. At $1,000 per ounce, the all-in sustaining cost (AISC) was slightly lower than the previous half year and within the guided AISC range of $940 to $1,025/oz.

Quartermaine said there would be a significant bump in production from Yaouré in the second half lowering the contribution to total production from Edikan in Ghana and its other Côte d’Ivoire mine, Sissingué. “But Edikan is also likely to have a good half,” said Quartermaine of the remainder of the financial year.

There had, however, been a resurgence in Covid-19 in Ghana and Côte d’Ivoire. “Infection rates are steadily rising. If anyone thinks we are not potentially threatened is not looking closely at the situation,” Quartermaine said.

Net debt increased $9m to $11.9m as of December 31, but there was minimal expenditure required to complete Yaouré whilst in the previous three months the company had paid $20m in debt and spent $62m on Yaouré.