Feb 5, 2018 - CF/Share (cps). 1.2. 6.3 ... Perseus produced 56.7kozs at Edikan in the Dec'17Q at an AISC of ... about sh
PRU.asx Buy 5 Feb 2018
Perseus Mining Ltd (PRU)
PERSEUS MINING LTD (PRU) Attention turns to the March 2018 quarter Perseus produced 56.7kozs at Edikan in the Dec’17Q at an AISC of US$1093/oz, compared to our projection of 60kozs and US$1050 AISC. Production improved markedly over the previous quarter, but not by as much as planned due to a recovered grade shortfall.
Share Price
$0.42
Valuation
$0.64
Price Target (12 month)
$0.58
Brief Business Description: +250kozpa gold producer and project developer of open pit operations in Ghana and Cote d'Ivoire.
Hartleys Brief Investment Conclusion Improving margins at Edikan and the successful development of Sissingue in 2018 are the keys to a better market rating. Chairman & MD Sean Harvey (Non-Executive Chairman) Jeff Quartermaine (Managing Director)
The Dec qtr performance was a step forward because of Edikan’s respectable cash surplus (A$12M), achieved despite a low received gold price ($US1260/oz, compared to US$1340/oz current spot price). Guidance was narrowly missed again, and the Company is still rebuilding trust among investors.
Top Shareholders Franklin Resources, Inc
7.7%
Van Eck Associates Corporation
5.1%
Ruffer LLP
5.0%
Company Address Level 2, 437 Roberts Rd Subiaco WA, 6008 Issued Capital
1033m
- fully diluted
Gold: Producer
Spotlight on Edikan
1182m
Market Cap
Sissingue is 4-6 weeks ahead of schedule but the Company is circumspect about short term production expectations. Perseus is sticking to June18 half production of 140-160kozs for the group, and we have apportioned that as 60kozs/qtr from Edikan and 17kozs (poured, all in the June qtr) at Sissingue. Company expects AISC of US$950-1050 across the two operations for the half. For the March quarter we are looking for 60kozs from Edikan at AISC US$1025/oz. It should be a straightforward quarter with no new pits, similar to the previous quarter but with no crusher problems or reconciliation tests. Unit mining costs and ore grades are the main apparent risks.
A$434m
- fully diluted
A$496m
Cash and bullion (31 Dec 17)
A$64m
EV
A$450m A$58/oz
EV/Resource oz
A$113/oz
EV/Reserve oz Prelim. (A$m)
FY17
FY18e
FY19e
176
244
335
Op Cash Flw (A$M)
14
75
219
Norm NPAT (A$M)
-26
-10
110
CF/Share (cps)
1.2
6.3
18.6
Prod (koz Au)
EPS (cps)
-5.6
-0.8
8.8
P/E
0.0
0.0
4.8
Dividend (cps)
0.0
0.0
0.0
Yield (%)
0.0
0.0
Mt
Resources Reserves
There’s a bit riding on it If Edikan hits or exceeds our targets in the March quarter there’s a chance Perseus’ 1.3Moz LOM plan will be embraced by the market, prompting a share price rebound towards valuation. The attendant +A$20M cash surplus from Edikan would also help bring the Yaoure timetable into focus. The ramifications of a miss at Edikan are a matter of degree. We think the market assumes Edikan will miss, perhaps by 5kozs and that costs will be US$1100/oz or so.
A$48m
Debt (31 Dec 17)
Moz
214
1.13
7.8
89
1.39
4.0
Perseus Mining Ltd
0.50
50.
0.45
45.
0.40
40.
0.35
35.
0.30
30.
A$ 0.25
25. M
0.20
20.
0.15
15.
0.10
10.
0.05
5.
0.00 Feb-17
Debt capacity extended, Yaoure up next At the end of December 2017 Perseus had A$45M in cash and bullion, and US$50M debt drawn down from facilities totalling US$70M. The Company extended its debt capacity by US$10M during the DecQ. Forward sales amount to 150kozs at US$1285/oz average. Flush with confidence from Sissingue’s construction, Perseus is investigating financing options for the US$263M Yaoure build. The Company expects to have debt financing offers to consider by the end of March.
Keeping faith in Buy recommendation
0.0
g/t
Jun-17
Oct-17
. Feb-18
Source: IRESS Volume - RHS PRU Shareprice - LHS Sector (S&P/ASX SMALL RESOURCES) - LHS
John Macdonald Resource analyst Ph: +61 8 9268 3020
E:
[email protected] Perseus Mining Ltd contributed to the travel and/or accommodation costs associated with a site visit to Ghana and Cote d’Ivoire in November 2017.
Hartleys maintains its Buy recommendation, as we keep faith in projections after the Dec’17 quarter, and the USD gold price has strengthened. The base case NAV has fallen from 67 to 64cps, while our NAV at spot prices has risen to 79cps. Hartleys Limited ABN 33 104 195 057 (AFSL 230052)
141 St Georges Page 1 of 11 Terrace, Perth, Western Australia, 6000
Hartleys does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Further information concerning Hartleys’ regulatory disclosures can be found on Hartleys website www.hartleys.com.au
Perseus Mining Ltd (PRU)
Hartleys Limited
5 February 2018
SUMMARY MODEL Perseus Mining Ltd PRU
Recommendation Buy
Market Information Share price Market Capitalisation Net cash (debt) June 2017 Issued fully paid shares Issued Capital (fully diluted) EV Valuation 12 month price target
Directors Sean Harvey (Non-Executive Chairman) Jeff Quartermaine (Managing Director) John McGloin (Non-Exec Director) Alex Davidson (Non-Exec Director) Mike Bohm (Non-Exec Director) Colin Carson (Exec Director) Sally Ann Layman (Non-Exec Director)
$0.42 $496m $8m 1033m 1182m $489m $0.64 $0.58
Profit & Loss
Unit
Net Revenue Other income/forwards Total Costs EBITDA - margin Depreciation/Amort EBIT Net Interest Foreign exchange Pre-Tax Profit Tax Expense NPAT Abnormal Items Minority interests Reported Profit
A$M A$M A$M A$M
Balance Sheet
Unit
Cash Other Current Assets Total Current Assets Property, Plant & Equip. Investments/other Tot Non-Curr. Assets Total Assets Short Term Borrowings Other Total Curr. Liabilities Long Term Borrowings Other Total Non-Curr. Liabil. Total Liabilities
A$M A$M A$M A$M A$M A$M A$M A$M A$M A$M A$M A$M A$M A$M
27 81 108 537 207 744 852 20 74 94
Net Assets
A$M
Cashflow
Unit
Operating Cashflow Forwards Income Tax Paid Minority interests Interest & Other Operating Activities
A$M A$M A$M A$M A$M A$M
Property, Plant & Equip. Exploration Asset sales Investments Investment Activities
A$M A$M A$M A$M A$M A$M A$M A$M A$M
Jun 17 Jun 18 Jun 19 Jun 20 Jun 21 289 13 -276 27 9% -54 -28 -13 -41 15 -26 -41 -67
400 -1 -325 74 18% -67 6 -4 -12 -10
581 -4 -362 215 37% -113 103 -9 16 110
578 0 -406 172 30% -139 32 -9 -3 21
-10
110
21
882 0 -453 429 49% -159 270 -5 -7 257 -66 191
-10
-5 104
-4 17
-12 180
Jun 17 Jun 18 Jun 19 Jun 20 Jun 21
57 57 151
58 81 139 538 207 745 883 38 74 112 32 57 89 201
154 81 235 683 207 890 1125 53 74 127 112 57 169 295
85 81 166 683 207 890 1056 52 74 126 59 57 116 242
175 81 256 553 207 760 1015 26 74 100 32 57 89 189
702
683
829
813
826
Jun 17 Jun 18 Jun 19 Jun 20 Jun 21 75 -1
219 -4
156 0
241 0
-27 -10
-4 70
-5 -9 202
-4 -9 143
-12 -5 224
A$M A$M A$M A$M A$M
-127 -16
-82 -7
-245 -12
-160
-22
-4 -147
-89
-257
-160
-22
Borrowings Dividends Equity Financing Activities
A$M A$M A$M A$M
20
51
92
-52
-52 -59
51
57 149
-52
-111
Exchange rate effect Net Cash Change Shares Ordinary Shares - End Diluted Shares - Weighted
A$M A$M Unit M M
0 -1 2 0 -1 -125 31 96 -69 90 Jun 17 Jun 18 Jun 19 Jun 20 Jun 21 1033 1036 1173 1182 1182 1182 1182 1182 1182 1182
Ratio Analysis
Unit
Jun 17 Jun 18 Jun 19 Jun 20 Jun 21
GCFPS A¢ CFR X EPS A¢ PER X DPS % Yield % Interest Cover x ROCE % ROE % Gearing % *All values fully diluted unless otherwise stated
14 3
13 32
1.2 36.2 -5.6
6.3 6.6 -0.8
18.6 2.3 8.8 4.8
13.2 3.2 1.4 29.9
-4% -6% -
1% -1% 4.6%
12% 13% 13.5%
4% 3% 7.2%
20.4 2.1 15.2 2.8 5.0 11.9 35% 31% 3.9%
Company Information Company Information Level 2, 437 Roberts Rd Subiaco WA, 6008 +61 8 6144 1700
www.perseusmining.com
Top Shareholders Franklin Resources, Inc Van Eck Associates Corporation Ruffer LLP
m shares 79.7 52.6 51.6
% 7.7 5.1 5.0
Group Production Summary Ore processed Strip ratio Head grade Total Gold produced
Unit Mt w:o g/t kozs
Jun 17 6.83 3.8 0.96 176
Jun 18 7.56 3.9 1.17 244
Jun 19 8.58 5.1 1.39 335
Jun 20 9.98 3.9 1.23 346
Jun 21 11.46 3.5 1.68 545
Group Costs Cost per milled tonne Cash costs after royalty Sustaining capital All in sustaining costs (AISC) Growth capital EBITDA / tonne milled ore
US$/t US$/oz US$M US$/oz US$M A$/t
Jun 17 28 1142 23 1271 86 4
Jun 18 30 1011 6 1040 53 10
Jun 19 31 815 9 837 159 25
Jun 20 30 886 11 916 122 20
Jun 21 29 409 14 665 17 53
P&L cash costs Costs after royalty, D&A
A$/oz A$/oz
1566 1875
1330 1606
1082 1419
1174 1578
832 1124
Prices AUDUSD Gold Gold
Unit US$/oz A$/oz
Jun 17 0.75 1239 1643
Jun 18 0.79 1285 1635
Jun 19 0.76 1325 1738
Jun 20 0.76 1275 1671
Jun 21 0.77 1250 1619
Hedging Hedged sales Price
Unit kozs A$/oz
Jun 17 63 1267
Jun 18 51 1275
Jun 19 60 1275
Jun 20 60 1275
Valuation 0.64 -10% 0.44 0.58 0.41 0.49
+10% 0.85 0.70 0.87 0.79
Sens 64% 11% 15% 53%
FY18 NPAT -9.8 -10% -3.5 -8.7 -8.3 -4.6
Sensitivity Analysis Base Case US Gold price +/-10% AUDUSD +/- 10% Production +/-10% Operating Costs +/-10% Unpaid Capital Expiry year 30-Jun-18 30-Jun-19 30-Jun-20 30-Jun-21 Total Reserves & Resources Dec '16 TOTAL RESOURCE Edikan (meas., ind.) Sissingue (meas., ind.) Yaoure (Ind.) INCLUDES TOTAL RESERVE Edikan open pit + u/g Sissingue open pit Yaoure open pit Hartleys model Dec '16 TOTAL INVENTORY Edikan open pit Sissingue open pit Yaoure open pit Share Price Valuation (NAV) 90% Edikan after tax 7% DR 87.5% Sissingue after tax, 8% DR 90% Yaoure after tax, 8% DR Exploration, all sites Corporate overheads Cash & bullion Debt Tax benefit Hedging Option/equity dilution Total
Source: Hartleys Research
Page 2 of 11
Sens 32% 9% 36% 23%
No. (M) 3 137 9
$M
Avg ex.
57.5
0.42
149
57.5
0.39
Mt 213.9 155.8 15.0 43.1
g/t Au 1.13 1.00 1.70 1.39
89.2 56.5 5.9 26.8 Mt 78.1 46.9 5.9 25.3
1.39 1.14 2.10 1.76 g/t Au 1.41 1.11 2.10 1.80
Risked Est. A$m Est. A$/share 338 0.33 215 0.21 166 0.14 72 0.07 -77 -0.07 69 0.07 -70 -0.07 -4 -46 664
0.00 -0.04 0.64
% ord 0.3% 13.2% 0.9% 14.4%
Koz Mkt cap/oz 7,756 101 5,010 820 1,926 3,986 2,071 398 1,517
196
Koz Mkt cap/oz 3544 221 1681 398 1464
+10% -16.1 -10.9 -11.3 -15.0
Hartleys Limited
Perseus Mining Ltd (PRU)
5 February 2018
DEC 17-JUNE 18 PRODUCTION At Edikan we are looking for 60kozs at AISC US$1025/oz in the current March 2018 quarter, predicated on 1.8Mt ore processed at a head grade of 1.20 g/t. Anything less (or higher in terms of costs) would lead to a downgrade of Hartleys’ estimated project value. It’s a straightforward quarter with no new pits, just like the previous but with no crusher problems or reconciliation tests. The Company hasn’t broken down its guidance for the current half by project or by quarter, but 60kozs would probably be bottom end of the range. MD was confident from site things were going (really) well on the conference call 29 January. Total and unit mining costs were higher in the Dec17Q due to a number of factors, and cost creep needs to be watched. However processing and admin costs did not show the same trend, suggesting the increase was not systemic. Ore grades are always a concern, but reconciliation suggests grades will conform to the model, at least within a percentage point or three. Edikan still has 1.3Mozs in pit reserves and the integrity of the estimate is still doubted by the market. If the project hits the above targets in the March quarter there’s a chance the entire LOM plan will get embraced, and other things being equal, a run to 60cps is on the cards. Also, Edikan is there to help finance Yaoure now, so a +A$20M cash surplus from Edikan for the quarter would help bring the Yaoure timetable into focus. The implications of a miss at Edikan are a matter of degree. The market assumes Edikan will miss, perhaps by 5kozs and that costs will be $1100/oz or so. The construction phase at Sissingue has gone as well as could be expected, almost like an off the shelf West Australian project; ahead of time and on budget. The Company has given little in the way of guidance at Sissingue for this quarter or next, reverting to “no certainty” in the commissioning period. We assume just 17kozs for the half, plus gold in circuit, which is our reading of the old LOM plan, not one that is 4-6 weeks ahead as Perseus stated late January. Hartleys has ore head grades of 1.3 g/t at Sissingue for the first 0.5Mt (to June 2018) and 2.1g/t for the following 1.4Mt (year to June 2019). Not so much is expected, cash flow wise, from Sissingue in the March quarter, when costs are indeterminate. We assume only outgoings so any sold gold would be a bonus. June quarter will more of a test.
EDIKAN (PRU 90%) In February 2018 Perseus estimated after tax, life of mine cash flows at Edikan from June 2017 of US$403M (US$1200/oz gold).
Three pits are currently active at Edikan. Perseus expects to average 240kozspa and US$875/oz AISC over the next five years. The average reserve grade is currently discounted by 3% to reflect uncertainty over reconciliations. The three pits each have broad ore benches exposed. The next major cutback is planned to start by November 2018. A crusher rebuild in December 2017, optimised in pit fragmentation and the end of Chirawewa’s carbonaceous ore type by August 2018 will contribute to simpler processing. Apart from engagement and support programs, community relations management comprises mainly working through claims for building cracks.
Page 3 of 11
Hartleys Limited
Perseus Mining Ltd (PRU)
Fig. 1: Fobinso pit, Edikan, November 2017
Source: Hartleys
Page 4 of 11
5 February 2018
Hartleys Limited
Perseus Mining Ltd (PRU)
Fig. 2: Esuajah North pit, Edikan, November 2017
Source: Hartleys
Fig. 3: Chirawewa pit, Edikan, November 2017
Source: Hartleys
Page 5 of 11
5 February 2018
Hartleys Limited
Perseus Mining Ltd (PRU)
5 February 2018
SISSINGUÉ (PRU 86%) Sissingué construction is ahead of time and on budget (US$116M expense to commercial production, anticipated for 1 April 2018). Commissioning began in December and first gold pour occurred in late January, 6 weeks ahead of schedule. Perseus is looking at bringing the Bele pits forward in the mine schedule, to displace lower grades in the Sissingué pit schedule in 2019. One of two road options will be selected; one is 20km shorter than the established 60km route but involves more construction work. Sissingué is Perseus’ first development project in Cote d’Ivoire.
The first six months of production will be from lower grade (1.3-1.7 g/t) oxide material. The Sissingué deposit is intrusive related with a deep weathering profile. About half the ore is oxidised/transitional material that is cheaper to mine and process.
Fig. 4: Sissingué plant construction, November 7, 2017
Source: Hartleys
YAOURÉ (PRU 90%) As flagged Perseus took a knife to the previous owner’s reserve estimates at Yaouré, settling on 27Mt at 1.76 g/t Au (1.52Mozs contained) in open pit designs with an average strip ratio of 5:1. 87% of reserves are in the CMA pit design, which is essentially a continuous lode system that will be mined first. Milling and CIL facilities capable of processing CMA’s hard ores at 3.3Mtpa will enable average annual gold production of 215kozs.
The Yaouré feasibility study was completed in November 2017.
Perseus estimates Yaouré’s development capital cost will be US$263M including contingency and a pre-strip. The figure is subject to revision through ongoing engineering studies due for completion by mid-2018. Average AISC are estimated at US$760/oz over the initial 6 year project life. Perseus plans to be in position to commit to Yaouré’s construction in mid-2018. An 18 month construction period would then precede commissioning by about January 2020.
Page 6 of 11
Perseus Mining Ltd (PRU)
Hartleys Limited
5 February 2018
On our current base case model, Hartleys estimates Perseus will have US$0-10M net debt by the end of June 2018, with about US$120M in free cash flow becoming available in FY2019. Assuming US$150M to spend on Yaouré in FY2019, external finance of at least $US60M will be required. Exercise of A$44c strike price warrants before April 2019 would raise US$44M. Perseus anticipates raising up to 50% debt finance (US$130M) for Yaouré, with the amount dependent on Edikan and Sissingué cash flows, and the amount of warrants exercised.
PRODUCTION AND COST FORECASTS Fig. 5:
Hartleys’ production forecasts
Group Production Sum m ary
Edikan Ore processed Strip ratio Head grade Met. Recovery Gold produced Sissingue Ore processed Strip ratio Head grade Met. Recovery Gold produced Yaoure Ore processed Strip ratio Head grade Met. Recovery Gold produced Company Ore processed Strip ratio Head grade Total Gold produced
Source: Hartleys
Page 7 of 11
Unit
Jun 17
Jun 18
Jun 19
Jun 20
Jun 21
Mt w:o g/t
6.8 3.80 0.96 0.84 176
7.1 3.88 1.16 0.86 227
7.2 5.40 1.24 0.86 247
7.2 3.30 1.20 0.86 240
7.2 2.00 1.20 0.86 240
0.5 3.56 1.32 0.90 17
1.4 3.56 2.19 0.90 88
1.4 3.56 1.50 0.90 60
1.0 3.56 3.30 0.90 92
1.4 7.20 1.14 0.90 46
3.3 6.60 2.24 0.90 214
10.0 3.9 1.23 346
11.5 3.5 1.68 545
kozs Mt w:o g/t kozs Mt w:o g/t kozs Mt w:o g/t kozs
6.8 3.8 0.96 176
7.6 3.9 1.17 244
8.6 5.1 1.39 335
Perseus Mining Ltd (PRU)
Hartleys Limited
Fig. 6:
5 February 2018
Hartleys’ cost forecasts
Group Costs Edikan Cost per milled tonne Cash costs after royalty Sustaining capital All in sustaining costs (AISC) Growth capital Sissingue Cost per milled tonne Cash costs after royalty Sustaining capital All in sustaining costs (AISC) Growth capital Yaoure Cost per milled tonne Cash costs after royalty Sustaining capital All in sustaining costs (AISC) Growth capital Company Cost per milled tonne Cash costs after royalty Sustaining capital All in sustaining costs (AISC) Growth capital
Jun 17 Jun 18 Jun 19 Jun 20 Jun 21 US$/t US$/oz $M US$/oz US$M US$/t US$/oz US$M US$/oz US$M
28 1142 23 1271 16
31 1033 5 1057 5
31 892 6 917 6
25 866 6 891 6
22 762 6 787 6
70
24 708 1 801 47
34 595 3 611 3
34 843 3 874 3
37 444 3 460 3
150
51 1042 2 1095 113
44 590 6 617 8
31 815 9 837 159
30 886 11 916 122
29 409 14 665 17
US$/t US$/oz US$M US$/oz US$M US$/t US$/oz US$M US$/oz US$M
28 1142 23 1271 86
30 1011 6 1040 53
Source: Hartleys
PEER COMPARISON Perseus is one of several Australian and North American listed companies with predominantly West African gold operations. West Africa is an active destination for foreign investment by international gold mining companies. Among mid-tier Australian listed gold companies Perseus trades at a relatively deep discount to Hartleys’ NAV.
Peer comparison table - West African gold miners. Mkt cap US$M Randgold Iamgold Endeavour Semafo Resolute Golden Star Perseus Asanko
LSE:RRS TSE:IMG TSE:EDV TSE:SMF ASX:RSG NYSE:GSS ASX:PRU TSE:AKG
10651 2600 1565 805 578 301 263 170
Price Last US$ps 113.24 5.59 16.22 2.48 0.78 0.80 0.25 0.84
Iss. Shs Net cash Resource M f.p. US$M cont Au kozs 94 572 22156 465 800 27100 97 -14 12600 325 255 5577 737 219 12100 376 -68 7400 1033 3 7756 203 60 6590
Reserve Ann Au AISC Adj EV EV/oz cont Au kozs US$/oz ann prodn kozs 2017 2017 US$M US$ 12396 1082 650 10079 9313 11635 845 1080 1800 2130 7100 600 900 1579 2632 3000 190 960 550 2893 5600 330 831 359 1089 1910 255 834 369 1448 3986 250 1100 260 1040 5110 210 960 110 524
Only fully paid ordinary shares are used in market cap and enterprise value figures. Net cash as at June 30 2017, adjusted for subsequent raisings. Resources include inferred. AISC used where available. Production estimates for CY2017 used where available.
Sources, Company websites, IRESS, Hartleys Research
Page 8 of 11
Operations
Mali, Cote d'Ivoire, DRC Ghana, Burkina Faso, Canada, Suriname Cote d"Ivoire, Mali, Burkina Faso, Ghana Burkina Faso Mali, Ghana, Australia Ghana Ghana, Cote d'Ivoire Ghana
Perseus Mining Ltd (PRU)
Hartleys Limited
5 February 2018
VALUATION AND PRICE TARGET S VALUATION o
The u accompanying Perseus model takes into account available information including Perseus’ projected group production guidance given periodically. r c
Modelled inventories and costs are based primarily on Perseus estimates, with e timing and cost differences. Gold price and exchange rate forecasts are set out in : I summary tables on page 2. R E Edikan, Sissingué and Yaouré are each valued by after tax discounted cash flow S methods at 7%, 8% and 8% real, after tax discount rates respectively. Tax, royalty andS minority interest payments are included according to agreements in place for Edikan and Sissingué. Yaouré fiscal arrangements are assumed to mirror those at Sissingué.
Nominal exploration value of A$73M (7cps) is included to account for all of Perseus’ exploration prospects outside of modelled inventory. Corporate overheads of A$15M per year, are assumed to 2025.
PRICE TARGET Perseus trades at a 30% discount to Hartleys’ NAV.
The price target is based on a discounted cash flow valuation of the projects, an informal estimate of exploration assets value and nominal assessment of Perseus other assets and liabilities as at June 30 2018. Hedging arrangements are valued separately from the mining assets. Using February 2018 spot price gold and currency price assumptions ($US1348/oz, AUDUSD 0.80) held flat, Hartleys’ valuation is 79 cps. Using Hartleys base case commodity and currency forecasts, set out in the summary table, the base case NAV estimate is 64cps. For Perseus the 12 month share price target is based on a 10% discount to the base case NAV; an adjustment made to account for general West African socio-political risk.
Page 9 of 11
Perseus Mining Ltd (PRU)
Hartleys Limited
5 February 2018
RISKS Key assumptions and risks for valuation Assumption
High
Risk to valuation if assumption is incorrect Industry ave. - high
Exploration, re-investment
Medium
Medium
Perseus may invest a portion of its cash and future free cash flows in exploration and/or other mineral asset acquisitions. Valuation assumes that future exploration and investments achieve acceptable returns.
Cost forecasts
Medium
Medium
Costs at Edikan have a historical basis. Cost inflation in Ghana and Côte d’Ivoire has the potential to affect operating costs. Compensating effects are assumed through exchange rates.
Exploration asset value
Medium
Low
Subjective value is attributed to exploration assets.
Low
High
Events in Ghana and Côte d’Ivoire have shifted towards stability for regional mining operations in the past 20 years. Foreign investment in mining is a significant contributor to the respective economies.
Gold price, currency
West African socio-political stability
Conclusion
Risk of not realising assumption
Comment Perseus’ forward looking AISC profile is close to the industry average, and hedging (25% of 2 yrs) is modest.
Cost and production risks are high but reducing as operations meet projected targets. Perseus faces industry average risks with respect to gold price and currency. Regional risks are mainly associated with community costs.
Source: Hartleys Research
Page 10 of 11
HARTLEYS CORPORATE DIRECTORY Research Trent Barnett Mike Millikan John Macdonald Paul Howard Aiden Bradley Oliver Stevens Michael Scantlebury Janine Bell
Head of Research Resources Analyst Resources Analyst Resources Analyst Research Analyst Research Analyst Junior Analyst Research Assistant
+61 8 9268 3052 +61 8 9268 2805 +61 8 9268 3020 +61 8 9268 3045 +61 8 9268 2876 +61 8 9268 2879 +61 8 9268 2837 +61 8 9268 2831
Corporate Finance Dale Bryan Richard Simpson Ben Crossing Ben Wale Stephen Kite Scott Weir Scott Stephens Rhys Simpson
Director & Head of Corp Fin. Director Director Associate Director Associate Director Associate Director Associate Director Manager
+61 8 9268 2829 +61 8 9268 2824 +61 8 9268 3047 +61 8 9268 3055 +61 8 9268 3050 +61 8 9268 2821 +61 8 9268 2819 +61 8 9268 2851
Registered Office Level 6, 141 St Georges TcePostal Address: PerthWA 6000 GPO Box 2777 Australia Perth WA 6001 PH:+61 8 9268 2888 FX: +61 8 9268 2800 www.hartleys.com.au
[email protected] Note: personal email addresses of company employees are structured in the following manner:
[email protected]
Hartleys Recommendation Categories Buy Accumulate
Neutral Reduce / Take profits Sell No Rating Speculative Buy
Share price appreciation anticipated. Share price appreciation anticipated but the risk/reward is not as attractive as a “Buy”. Alternatively, for the share price to rise it may be contingent on the outcome of an uncertain or distant event. Analyst will often indicate a price level at which it may become a “Buy”. Take no action. Upside & downside risk/reward is evenly balanced. It is anticipated to be unlikely that there will be gains over the investment time horizon but there is a possibility of some price weakness over that period.
Institutional Sales Carrick Ryan Justin Stewart Simon van den Berg Chris Chong Digby Gilmour Veronika Tkacova
+61 8 9268 2864 +61 8 9268 3062 +61 8 9268 2867 +61 8 9268 2817 +61 8 9268 2814 +61 8 9268 3053
Wealth Management Nicola Bond Bradley Booth Adrian Brant Nathan Bray Sven Burrell Simon Casey Tony Chien Tim Cottee David Cross Nicholas Draper John Featherby Ben Fleay James Gatti John Goodlad Andrew Gribble David Hainsworth Murray Jacob Gavin Lehmann Shane Lehmann Steven Loxley Andrew Macnaughtan Scott Metcalf David Michael Jamie Moullin Chris Munro Michael Munro Ian Parker Matthew Parker Charlie Ransom Mark (CEO)Sandford David Smyth Greg Soudure Sonya Soudure Dirk Vanderstruyf Samuel Williams Jayme Walsh
+61 8 9268 2840 +61 8 9268 2873 +61 8 9268 3065 +61 8 9268 2874 +61 8 9268 2847 +61 8 9268 2875 +61 8 9268 2850 +61 8 9268 3064 +61 8 9268 2860 +61 8 9268 2883 +61 8 9268 2811 +61 8 9268 2844 +61 8 9268 3025 +61 8 9268 2890 +61 8 9268 2842 +61 8 9268 3040 +61 8 9268 2892 +61 8 9268 2895 +61 8 9268 2897 +61 8 9268 2857 +61 8 9268 2898 +61 8 9268 2807 +61 8 9268 2835 +61 8 9268 2856 +61 8 9268 2858 +61 8 9268 2820 +61 8 9268 2810 +61 8 9268 2826 +61 8 9268 2868 +61 8 9268 3066 +61 8 9268 2839 +61 8 9268 2834 +61 8 9268 2865 +61 8 9268 2855 +61 8 9268 3041 +61 8 9268 2828
Significant price depreciation anticipated. No recommendation. Share price could be volatile. While it is anticipated that, on a risk/reward basis, an investment is attractive, there is at least one identifiable risk that has a meaningful possibility of occurring, which, if it did occur, could lead to significant share price reduction. Consequently, the investment is considered high risk.
Disclaimer/Disclosure The author of this publication, Hartleys Limited ABN 33 104 195 057 (“Hartleys”), its Directors and their Associates from time to time may hold shares in the security/securities mentioned in this Research document and therefore may benefit from any increase in the price of those securities. Hartleys and its Advisers may earn brokerage, fees, commissions, other benefits or advantages as a result of a transaction arising from any advice mentioned in publications to clients. Any financial product advice contained in this document is unsolicited general information only. Do not act on this advice without first consulting your investment adviser to determine whether the advice is appropriate for your investment objectives, financial situation and particular needs. Hartleys believes that any information or advice (including any financial product advice) contained in this document is accurate when issued. Hartleys however, does not warrant its accuracy or reliability. Hartleys, its officers, agents and employees exclude all liability whatsoever, in negligence or otherwise, for any loss or damage relating to this document to the full extent permitted by law.
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