Gold Producer Doubles Dividend as African Operations Deliver 22% Profit Growth

• Perseus Mining reported strong half-year results with gold production of 253,709 ounces at an all-in site cost of $1,162 per ounce, generating a profit after tax of $201 million (up 22% year-on-year).
• The company's net cash position reached $704 million with zero debt, supporting an increased interim dividend of 2.5 Australian cents per share (double the previous year) and an ongoing A$100 million share buyback program.
• Growth initiatives include underground development at CMA (a first for Côte d'Ivoire), advancing the Nyanzaga Gold Project in Tanzania, and continuing exploration at existing operations to extend mine life.
• Perseus maintains a strategic hedging position on approximately 24% of production to mitigate gold price risk while benefiting from current high gold prices on the remaining 76%.
• The company focuses on balancing operational efficiency, cost control, maintaining social license in African jurisdictions, and providing shareholder returns while funding organic growth opportunities.

Perseus Mining Limited (ASX/TSX: PRU) has released its financial results for the half-year ending December 2024, showcasing a robust performance across its African gold operations. The company, which operates gold mines across Ghana and Côte d'Ivoire with development projects in Tanzania, continues to demonstrate its capability to generate substantial cash flow while maintaining operational efficiency in an elevated gold price environment. CEO and Managing Director Jeff Quartermaine recently discussed these results, highlighting the company's growth strategy and approach to capital allocation in a market that presents both opportunities and challenges for gold producers operating in Africa.

Financial Performance Highlights

Perseus Mining's December 2024 half-year results demonstrated significant growth across all key financial metrics. The company reported revenue of US$581.8 million, representing a 19% increase compared to the same period last year. This translated into a profit after tax of US$201 million, up 22% year-on-year, driven by strong gold production and higher realised gold prices.

The EBITDA (earnings before interest, tax, depreciation, and amortisation) reached US$352.7 million, a 26% improvement, while gross profit from operations grew by the same percentage to US$265.3 million. This performance has allowed Perseus to boost its earnings per ounce to US$819, a 25% increase from the previous comparable period.

"The profit after tax was US$201 Million, up about 22% on the prior period. Operating cash flow was US$248 million up 17% on the prior period. What's really important from our perspective underlying all of this is that our earnings per ounce are around US$819 per ounce, which is 25% higher than in the previous period."

Interview with Managing Director & CEO, Jeff Quartermaine

Operational Performance & Outlook

The company produced 253,709 ounces of gold during the half-year at an all-in site cost (AISC) of US$1,162 per ounce, positioning Perseus in the upper half of its guided production range while maintaining costs below the guided range. This operational efficiency has been achieved despite inflationary pressures facing the mining industry globally.

Production was distributed across Perseus's three operating mines: Yaouré Gold Mine contributed 123,158 ounces, Edikan Gold Mine produced 96,634 ounces, and the Sissingué Gold Complex added 33,917 ounces. Looking ahead, the company has provided guidance for the June 2025 half-year with expected production between 215,000 and 250,000 ounces at an AISC of US$1,360-1,435 per ounce.

The slight increase in projected costs for the second half reflects challenges including deeper mining at certain operations and the natural depletion of higher-grade zones. However, the company's ongoing growth initiatives are designed to offset these challenges over the medium to long term.

Capital Management & Shareholder Returns

Perseus's strong financial position is evident in its balance sheet, with US$704 million in cash and bullion as of December 31, 2024, representing an increase of US$117 million in just six months. The company maintains zero debt while also having access to a US$300 million undrawn credit facility, providing significant flexibility for future growth opportunities.

This financial strength has enabled Perseus to enhance shareholder returns through both dividends and share buybacks. The Board has declared an interim dividend of 2.5 Australian cents per share, double the amount paid in the corresponding period last year, equating to an annualised yield of 1.87%. Additionally, the company initiated a share buyback program in August 2024, committing up to A$100 million to repurchase shares. As of February 10, 2025, Perseus had purchased 4,689,269 shares for approximately A$12.16 million.

Quartermaine explained the rationale behind implementing both dividend payments and share buybacks: 

"Some people would prefer a buyback as opposed to a dividend stream in the sense that the dividends are not franked. So these are things that we need to look at very carefully."

Growth Strategy

Perseus Mining's growth strategy encompasses both organic expansion at existing operations and potential acquisitions. Near-term organic growth initiatives include:

• Development of the CMA underground mine at Yaouré, which will be the first commercial underground gold mine in Côte d'Ivoire, with portal cutting expected to commence by mid-2025.
• Advancement of the Nyanzaga Gold Project in Tanzania, scheduled to begin production in early 2027, which will help offset the natural production decline at Sissingué and Edikan mines.
• Potential mine life extensions at all three existing operations by reevaluating pit designs using higher gold price assumptions than the US$1,500 per ounce used in previous reserve estimates.

Regarding acquisition strategy, Quartermaine noted that Perseus has already secured "two of the three best undeveloped assets on the continent in Africa," referring to Nyanzaga and Meyas Sand in Sudan, but remains cautious about pursuing further acquisitions in the current competitive environment.

Highlighting the challenges of operating in African jurisdictions where government participation and taxation can significantly impact returns, Quartermaine emphasised:

"You've got to make a return on investment. You need a lot of gold at very good prices to make a reliable return on your investment."

Operating in African Jurisdictions

A significant portion of Perseus's strategy involves effectively managing the risks associated with operating in African jurisdictions. The company emphasises maintaining a strong social license to operate by ensuring fair distribution of benefits among all stakeholders, including host governments and local communities.

While acknowledging challenges related to security costs, political changes, and fiscal regimes, Quartermaine suggested that some of these are balanced by advantages relative to operations in jurisdictions like Australia, which face different challenges including high labor costs and regulatory burdens:

"You can run a company well in Africa, or badly, just like you can run a company well in Canada, or badly. It just depends on what you do. I don't think it's necessarily jurisdiction specific...You've got to be willing to recognise the challenges, know what they are, work up strategies of mitigating, and then go and execute fearlessly. And that's what we've been trying to do."

His comments highlight Perseus's strategic focus on leveraging its accumulated expertise in African operations, which the company views as a competitive advantage rather than pursuing opportunities in unfamiliar jurisdictions.

Gold Price & Risk Management

Perseus Mining takes a measured approach to managing gold price risk through selective hedging. Currently, approximately 24% of production is hedged, securing a minimum price of $2,500 per ounce for this portion while allowing the remaining 76% of production to benefit from spot prices, which have recently exceeded $2,900 per ounce.

Quartermaine acknowledged the difficulty in predicting long-term gold price movements: 

"It's hard to see reasons for the gold price falling in the short term... but do I believe gold is going to be at $2,900 for the next 20 years? I'd like to believe it, but I'm struggling with that one."

This balanced approach to hedging reflects the company's commitment to responsible risk management while maintaining upside exposure to favorable gold market conditions.

Future Outlook & Priorities

Looking ahead, Perseus has outlined several key priorities for continued success:

• Maintaining production and financial performance in line with market guidance
• Sustaining its social license to operate across all jurisdictions
• Balanced capital management that provides shareholder returns while maintaining capacity for growth
• Pursuing organic growth through mine life extensions and development of new projects
• Continuing to evaluate potential acquisition opportunities that align with the company's return requirements

The company's approach to evaluation remains disciplined, with Quartermaine emphasising that:

"Our job is deploying shareholders' capital and deploying it in a way that generates the best benefit that we can possibly derive."

The Investment Thesis for Perseus Mining

• Strong Financial Position: Zero debt with US$704 million in cash and bullion, plus US$300 million in undrawn credit facilities, providing significant financial flexibility for growth and returns.
• Cash Flow Generation: Demonstrated ability to generate substantial operating cash flow (US$248 million in H1 FY25), with operating cash flow per ounce reaching US$976 (up 20.8%).
• Shareholder Returns Focus: Commitment to returning capital to shareholders through dividends (doubled to 2.5 Australian cents per share) and share buybacks (A$100 million program underway).
• Growth Pipeline: Clear organic growth pathway with CMA underground development (Côte d'Ivoire), Nyanzaga Gold Project (Tanzania), and potential mine life extensions at existing operations.
• Operational Excellence: Consistent performance across three producing mines with demonstrated ability to control costs (AISC of US$1,162/oz) in an inflationary environment.
• Gold Price Leverage: Strategic hedging approach (24% of production hedged) provides downside protection while maintaining significant exposure to current high gold prices.
• African Expertise: Competitive advantage through accumulated intellectual capital and operational experience in African jurisdictions, with established relationships and understanding of operating environments.
• Value Creation Focus: Disciplined approach to capital allocation with emphasis on generating returns on investment rather than growth for growth's sake.

Perseus Mining's December 2024 half-year results demonstrate the company's ability to convert strong operational performance into significant financial returns in the current favorable gold price environment. With a robust balance sheet, established production base, clear growth pathway, and commitment to shareholder returns, Perseus is well-positioned to navigate the opportunities and challenges of gold mining in Africa.

The company's disciplined approach to capital allocation, operational efficiency, and risk management provides a solid foundation for continued performance, even as it remains vigilant regarding potential gold price volatility and jurisdictional challenges. 

Macro Thematic Analysis: Gold Mining in 2025

The gold mining sector in early 2025 finds itself operating in a precious metals bull market that combines high spot prices with persistent operational challenges. With gold trading around US$2,900 per ounce, companies with operational discipline are positioned to generate exceptional cash flows, even as the industry confronts inflationary pressures affecting labor, energy, and materials costs.

Perseus Mining exemplifies a mid-tier producer effectively navigating this environment. The company has benefited from gold's role as both an inflation hedge and geopolitical safe haven while maintaining operational discipline. This has resulted in expanding margins, with Perseus reporting a cash margin of approximately US$1,188 per ounce based on their average realised price of US$2,350 and AISC of US$1,162.

The challenge facing gold producers is balancing current profitability against long-term sustainability. As Jeff Quartermaine notes: "The gold price is rising at a faster rate than our costs have been moving," creating opportunities to potentially revise mine plans and extract additional ounces that may not have been economical at lower gold prices. However, he cautions that this approach comes with risks: "What we don't want to do is find ourselves in the middle of a rather extravagant cutback only to find that we're going to expose gold that's no longer actually profitable."

This highlights the sector's fundamental dilemma – maintaining discipline while capitalising on cyclical opportunities. For investors, companies demonstrating both prudence and growth represent potential value in a market where many producers struggle with declining reserves, jurisdictional challenges, and capital allocation discipline.

As Quartermaine succinctly summarises the opportunity and challenge: 

"Our business is not about spending money; it's about generating benefits." 

This philosophy underscores why companies with both disciplined operations and clear growth pathways are increasingly attracting investor attention in the current gold market environment.