Perseus Mining - Delivering Consistent Results & Pursuing Disciplined Growth

• Perseus Mining achieved strong Q1 results, producing 127,471 ounces at an all-in cost just over $1,000/oz
• The company recently acquired the Nyanzaga project from OreCorp, aiming to bring it into production by early 2027 through relocation, drilling, and engineering work
• Perseus is reviewing growth opportunities at its existing mines given the current high gold price environment
• The company aims to expand to 4 long-life mines with 10-12Moz reserves through organic growth, exploration and potential acquisitions
• Perseus plans to return surplus cash to shareholders through dividends, considering bonus dividends, capital returns or buybacks based on the situation

About Perseus Mining

Perseus Mining is an Australian gold mining company with a focus on operating mines and development projects in Africa. The company currently has three producing mines - two in Côte d'Ivoire and one in Ghana - along with development properties in Tanzania and Sudan. Perseus has been progressing strongly, with over US$700 million of cash on its balance sheet and no debt, positioning it well to continue delivering growth and benefits to all stakeholders.

Interview with Chairman & CEO, Jeff Quartermaine

Solid Quarterly Performance Continues

Perseus Mining reported another robust quarter, largely in line with its previous performance. The company produced 127,471 ounces of gold in Q1, with a financial year to date gold production of 389,048 ounces. All-in sustaining costs (AISC) came in a touch higher at just over $1,091 per ounce for the March 2024 quarter, which was slightly above the prior quarter.

Perseus's strong operating performance is expected to continue for the remainder of the June 2024 Half Year, with gold production guidance unchanged at 226,000-254,000 ounces and AISC projected to remain within the range of US$1,180 to US$1,340 per ounce.

The average gold sales price rose by 3% compared to the previous quarter, reaching US$2,025 per ounce, although the quantity of gold sold decreased to 115,648 ounces due to the timing of gold shipments and sales.

Perseus achieved an impressive average quarterly cash margin of US$934 per ounce of gold, resulting in a notional operating cash flow of US$119 million for the quarter and US$373 million for the nine-month period ending March 31, 2024.

The company maintained a strong financial position at the end of the quarter, with an available cash and bullion balance of US$702 million, an additional US$74 million in listed securities, zero debt, and US$300 million of undrawn debt capacity.

CEO Jeff Quartermaine commented, "Very strong performance, very strong position for the company."

The Nyanzaga Gold Project

A key focus for Perseus is the integration and development of its recently acquired OreCorp's Nyanzaga Gold project in Tanzania. Having crossed the 90% ownership threshold, the acquisition is essentially complete, with the offer closed on April 19th. The company has wasted no time in engaging with key stakeholders in Tanzania to pave the way for the project's development.

"The reception that we received from all levels of government, local government, central government, and from our team in Tanzania has been absolutely first class and people are extremely keen to see progress on the ground," Quartermaine noted.

Perseus aims to bring the Nyanzaga project into commercial production by early 2027. To achieve this, the company has designed immediate work programs focused on relocation, housing, and compensation for landowners, as well as drilling to convert inferred resources and front-end engineering and design. The goal is to reach a final investment decision by the end of 2024, based on a detailed and fully costed design and an agreed financial model with the government.

Optimizing Existing Assets

In addition to the Nyanzaga project, Perseus is reassessing its approach to existing projects in the current high gold price environment. The company is revisiting decisions made years ago at its Edikan mine in Ghana, which came into production in 2012 when gold prices were under pressure. By re-evaluating these opportunities in light of the higher gold price, Perseus aims to generate improved margins and returns.

Quartermaine explained, "We are going back to look at some of those decisions that were taken 10 years ago in the light of an elevated gold price, saying, 'Well, can we generate the margins that we would like to generate now, given that the gold price is a bit higher than what it was in those days?' And I have to say that, certainly anecdotally, I haven't seen the numbers myself, but anecdotally from the team who is looking at these things, we are very encouraged about some of those opportunities."

Growth Strategy & Capital Allocation

Perseus Mining has articulated a clear growth strategy to the market, aiming to upgrade its asset portfolio through both organic and inorganic means. The company's general target is to have at least four mines with a mine life exceeding 10 to 15 years and an ore reserve inventory of 10 to 12 million ounces.

To achieve this, Perseus will pursue exploration, potential acquisitions, and development, all of which will be funded by the cash on its balance sheet and ongoing cash generation from operations. The company produces around 1,500 ounces of gold each day, with a margin of about $1,275 per ounce, translating to approximately $1.875 million in daily cash flow.

Regarding capital management, Perseus will evaluate its cash balances and surpluses at the end of each financial reporting period to determine how much can be reasonably returned to shareholders while considering its growth aspirations. The company has a dividend policy targeting an annualized yield of 1%, with the potential for additional bonus dividends. However, Perseus remains open to other capital management options, such as capital returns or share buybacks, and will carefully examine these alternatives to make the best decision for its shareholders.

The Investment Thesis for Perseus Mining

• Consistent operational performance: Perseus Mining has demonstrated a track record of delivering strong quarterly results, with robust gold production, well-controlled costs, and impressive margins.
• Strong financial position: With over US$700 million in cash and no debt, Perseus is well-capitalized to fund its growth initiatives and weather potential market volatility.
• Growth pipeline: The company's recently acquired Nyanzaga project provides a clear path to growth, with a target of bringing the mine into production by early 2027. Additionally, Perseus is actively evaluating optimization opportunities at its existing assets to enhance margins and returns.
• Disciplined capital allocation: Perseus has a balanced approach to capital allocation, focusing on funding growth through exploration, acquisitions, and development while also returning surplus cash to shareholders through dividends and potentially other means.
• Experienced management: The company's management team has demonstrated its ability to execute on its strategy, delivering consistent operational performance and making prudent investment decisions.

Conclusion

Perseus Mining presents a compelling investment case for those seeking exposure to a growing, financially strong gold producer with a clear strategy for value creation. The company's consistent operational performance, robust balance sheet, and disciplined approach to growth and capital allocation set it apart in the gold mining sector. As Perseus continues to advance its Nyanzaga project and optimize its existing assets, investors may be well-served to keep a close eye on this rising African gold producer.