Perseus Mining - Responsible African Operations & Community Engagement

• Perseus Mining is an Australian-listed gold mining company with operations focused in Africa, currently operating three mines and developing additional projects.
• The company emphasizes the importance of ESG, particularly the social aspect, in maintaining their social license to operate in host countries.
• Perseus Mining adapts its business model to suit local conditions while maintaining core values, and distributes benefits fairly among stakeholders.
• The company prioritizes safety through its SHED (Safely Home Every Day) program, achieving a low total recordable injury frequency rate.
• Perseus Mining works to understand and address the needs of different community groups, including youth, in the areas where they operate.

Perseus Mining Limited stands out as a compelling investment opportunity in the gold mining sector, with its strategic focus on African operations and commitment to sustainable practices. As global investors increasingly seek exposure to precious metals and responsible resource development, Perseus offers a unique value proposition.

Sustainable Practices & Strong Community Ties

Perseus Mining, an Australian-listed company, has positioned itself as a significant player in the African gold mining industry. With three operating mines and several development projects in the pipeline, Perseus has established a strong presence on the continent. Chairman & CEO Jeff Quartermaine explains the company's focus:

"We're an Australian listed gold mining company, but all of our activities are focused on the African continent, where we have three operating mines at the present time and a couple of projects that will be put into development in the fairly in the near future."

This strategic geographic concentration allows Perseus to leverage its expertise in navigating the unique challenges and opportunities presented by African markets. The company's willingness to operate in multiple jurisdictions across Africa demonstrates its adaptability and risk management capabilities, factors that are crucial for success in emerging markets.

ESG Approach: More Than Just Compliance

In an era where ESG considerations are increasingly important to investors, Perseus Mining has developed a nuanced and practical approach. The company recognises that while environmental and governance aspects are non-negotiable compliance issues, the social component is critical for long-term success.

Quartermaine emphasises this point:

"For us ESG is spelt slightly differently to the way other people spell it. We spell it with a small e, a large capital S, and a small G on the basis that environmental obligations are spelt out very clearly and you must comply with those things - that's a that's a non-negotiable. Similarly in the governance area as well."

This prioritization of social considerations reflects Perseus's understanding that maintaining a social license to operate is fundamental to its business model. By focusing on community engagement and local development, the company aims to create a virtuous cycle in which community support translates into operational stability and productivity.

Interview with Chairman & CEO, Jeff Quartermaine

Adapting to Local Contexts

One of Perseus Mining's key strengths is its ability to adapt its operations to the specific needs and expectations of each host country. The company recognises the diversity within Africa, acknowledging the different historical, cultural, and economic contexts of each nation where it operates. Quartermaine notes:

"Africa has 51 to 54 different countries, depending on your definition. Ethnically, there are a lot of differences. Historically, they're very different, having had, say, a British or French or Belgian Colonial background, so there are a lot of different influences in each of these countries, and it does drive people's thought processes and behaviours."

This awareness translates into a flexible approach to business, where Perseus adjusts its practices to align with local norms and expectations while maintaining its core values. This adaptability is crucial for navigating the complex regulatory and social environments in different African countries.

Fair Distribution of Benefits

Perseus Mining's approach to benefit-sharing is another aspect that should interest investors. The company operates under a mission to generate benefits for all stakeholders in fair and equitable proportions. This approach helps to align the interests of the company with those of its host countries and communities.

Quartermaine explains the financial arrangements:

"Usually, the country will have a carried interest in the project. They will receive royalties on the sale of products; they will receive income tax. When you add all this up, it's very very rare in our experience that the government would take less than 50% of the revenue that's generated in the business."

This transparent approach to revenue sharing can help mitigate political risks and foster positive relationships with host governments, potentially leading to more stable and predictable operating environments.

Community Development & Youth Engagement

Perseus Mining demonstrates a sophisticated understanding of community needs, recognising the diverse interests of different demographic groups. The company's approach to community development goes beyond simple infrastructure projects, addressing the specific needs of men, women, and youth in the areas where they operate.

Particularly noteworthy is Perseus's recognition of the importance of youth engagement in Africa, where a significant portion of the population is under 20. By focusing on education, skills development, and employment opportunities for young people, Perseus is not only contributing to local development but also potentially cultivating a skilled local workforce for its future operations.

Safety: A Core Operational Focus

Investors should take note of Perseus Mining's strong emphasis on safety, as reflected in its SHED (Safely Home Every Day) program. The company's total recordable injury frequency rate of 1.06 per million man-hours worked across its operations is impressive, especially considering the challenging environments in which it operates.

This focus on safety is not only ethically important but also has significant business implications. A strong safety record can lead to improved operational efficiency, lower insurance costs, and better relations with both employees and regulators.

Environmental Stewardship

While Perseus Mining strongly emphasises social issues, it does not neglect its environmental responsibilities. The company applies global standards to its environmental practices, ensuring that its operations do not negatively impact local ecosystems.

However, Quartermaine points out a challenge in this area: the presence of artisanal and illegal mining operations near Perseus's sites, which often engage in environmentally harmful practices. This situation highlights the complex realities of operating in some African countries and underscores the importance of Perseus's efforts to maintain high environmental standards.

Navigating Political & Regulatory Landscapes

Perseus Mining's success in Africa is partly due to its ability to effectively engage with host governments. The company has benefited from the increasing sophistication of African governments in dealing with international mining companies, particularly as more internationally experienced professionals return to work in their home countries. Quartermaine notes:

"We've had extremely good experiences with our host governments. I have to say, in every place where we've operated, we've gone out of our way to build relationships, to spend time talking to people and trying to understand their perspective and hopefully help them to understand ours."

This approach of mutual understanding and dialogue has helped Perseus navigate the complex political and regulatory environments in its host countries, potentially reducing political risk for investors.

Financial Performance & Growth Prospects

While specific financial details were not provided in the interview, Perseus Mining's ability to operate successfully across multiple African jurisdictions suggests a robust business model. The company's upcoming quarterly results (as of the interview date) were anticipated to reflect positively on its operations, particularly given the favourable gold price environment.

Investors should look forward to these financial disclosures to get a more detailed picture of Perseus's operational efficiency and profitability. The company's pipeline of development projects also suggests potential for future growth and expansion of its production base.

The Investment Thesis for Perseus Mining

• Established presence in multiple African gold-producing regions, providing geographic diversification within the continent
• Strong focus on ESG, particularly social aspects, potentially reducing operational and political risks
• Demonstrated ability to adapt to local contexts while maintaining core values and standards
• Impressive safety record, indicating operational excellence and potential for cost efficiencies
• Pipeline of development projects suggesting potential for future production growth
• Exposure to gold, a traditional safe-haven asset, amidst global economic uncertainties
• Transparent approach to benefit-sharing with host countries, potentially leading to more stable operating environments
• Focus on youth engagement and community development, potentially securing long-term social license to operate
• Upcoming financial results expected to reflect positively on operations, given favourable gold prices

Perseus Mining presents a compelling investment case for those interested in the gold mining sector and African resource development. The company's strategic focus on Africa, coupled with its nuanced approach to ESG issues and community engagement, positions it well to navigate the challenges and opportunities of operating in emerging markets.

Its emphasis on safety, environmental stewardship, and fair benefit-sharing demonstrates a long-term vision that aligns with the interests of host countries and communities. This approach not only supports the company's social license to operate but also potentially mitigates various operational and political risks.

As global demand for responsibly sourced gold continues to grow, Perseus Mining's established presence in Africa and its pipeline of development projects suggest the potential for sustained growth. However, as with any mining investment, investors should carefully consider the inherent risks associated with resource extraction, commodity price volatility, and operating in emerging markets.

Overall, Perseus Mining offers investors an opportunity to gain exposure to African gold production through a company that demonstrates a sophisticated understanding of the operational, social, and governance challenges of its operating environment.

Macro Thematic Analysis

The macro thematic underlying Perseus Mining's operations is the growing global demand for responsibly sourced gold, particularly from emerging markets in Africa. This trend is driven by several factors:

• Economic growth in developing countries: As economies in Africa and other emerging markets continue to grow, there is increasing domestic demand for gold, both for jewelry and as a store of value.
• Global economic uncertainty: In times of economic turbulence, gold often serves as a safe-haven asset, driving demand from investors worldwide.
• ESG considerations: Investors and consumers are increasingly demanding ethically sourced materials, including gold. Companies that can demonstrate responsible mining practices may command a premium.
• Resource nationalism: Many African countries are seeking to retain more value from their natural resources. Mining companies that can demonstrate fair benefit-sharing and positive community impact are likely to be favoured.
• Technological advancements: Improving mining technologies are making previously uneconomical deposits viable, opening up new opportunities in Africa.
• Infrastructure development: As African countries invest in infrastructure, it becomes easier and more cost-effective to develop and operate mines in previously remote or inaccessible areas.
• Geopolitical shifts: As traditional mining jurisdictions become more challenging or depleted, Africa's relative attractiveness as a mining destination is increasing.

"If we don't have a social license to operate, if we're not welcome in our host countries, we've got nothing at all. It doesn't matter how much money we have or how clever our people are, or how good our assets are; if we're not welcome, we don't do anything."

Challenges remain, including political instability in some regions, competition from artisanal and illegal miners, and the need for significant capital investment in new projects. This encapsulates the critical importance of Perseus's approach to community engagement and benefit-sharing in realizing the potential of African gold mining. With its focus on African operations and commitment to responsible mining practices, Perseus Mining is well-positioned to capitalize on these trends.