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Perseus Mining’s positive outlook makes this a gold sector standout: Canaccord Genuity

Published: 06:53 03 Aug 2021 BST

Perseus Mining Ltd - Perseus Mining’s positive outlook makes this a gold sector standout: Canaccord Genuity
Perseus remains one of Canaccord’s preferred gold exposures with a BUY recommendation.

Perseus Mining Ltd (ASX:PRU, TSX:PRU, OTC:PMNXF) delivered a stronger than expected June quarter, with group gold production of 103,000 ounces exceeding guidance and FY21 total of 329,000 ounces also above guidance.

The beat was driven by Yaoure, where the production ramp-up exceeded Canaccord’s expectations on throughput, grades and recoveries.

Cashflow beat Canaccord estimates on higher gold production/sales, with Perseus finishing FY21 with net cash of US$56 million (following US$30 million debt repayment).

The following is an extract from Canaccord June quarter recap:

1H'FY22 guidance - Yaoure surprise offsets lower Edikan/Sissingue: H1'FY21 Group guidance of 225-255koz at US$925-1,025/oz AISC is mostly in line with prior CGe of 226koz at US$910/oz. Breaking down guidance by asset, we highlight Yaoure H1 guidance at 130-140koz at US$675-775/oz AISC, which materially exceeds prior CGe of 8lkoz at US$954/oz. This is expected to be driven by higher throughput rates and grades, with increasing volumes of higher-grade fresh ore from the CMA pit to be supplemented by additional oxide material (softer oxides allowing throughput to exceed nameplate of 3.3Mtpa). Implied annualised FY22 production of ~270koz materially exceeds prior expectations, with our modelling having previously called for peak production of 261koz in CY25. The implications of this are significant, in our view, with AISC guidance implying a payback period of ~15 months following commissioning in late 2020.

Offsetting Yaoure, 1HFY22 guidance for Edikan and Sissingue lands below expectations. Edikan guidance of 70-80koz at US$1,350-1,450/oz compares to prior CGe of 102koz at US$1,000/oz, which we suspect is driven by continued poor grade reconciliation at Fetish (~25% of Ore Reserves). At Sissingue, lower than expected H1FY22 guidance (25-35koz at US$950-1,070/oz vs prior CGe 43koz at US$650/oz AISC) is attributed to the delays in receiving approvals for Fimbiasso (received in Jul'21). In advance of mining at Fimbiasso, production is expected to be supported by recently identified extensions of mineralisation at Sissingue, albeit at lower grade.

New mine plans for Yaoure and Sissingue expected in Aug'21: PRU has flagged updated LOM plans for both operations to be released in Aug'21. We expect changes at Yaoure mine plan to revolve around near-term addition of oxides (expected to exclude UG potential; UG Resources 595koz at 6.2 q/t), At Sissingue, we look to release of the Bagoe DFS results as the basis for probable extensions to mine life (not included in CGe) beyond the remaining ~2 years. We highlight potential upside to Group CY23-5 production forecasts (CY23e/24e 430koz/399koz respectively) on inclusion of Bagoe to our modelled mine life at Sissingue.

Model revisions: FY2l estimates are revised on JunQ results and aligning our production modelling to PRU guidance. Revisions result in a 3% increase to FY22e EBITDA, with FY23 estimates mostly unchanged pending release of updated LOM plans.

Maiden dividend or share buy back on the horizon? We note management comments on the potential for capital management initiatives which in our view could include maiden dividends and/or share buy backs. We see this as affirmation of our outlook for PRU (based on production growth, profitability and cashflow).

Valuation and recommendation

We lift our target price (lx fwd curve NPV5%) to $2.00 based on upgraded FY22 estimates and potential for mine life extensions at Sissingue. PRU remains one of our preferred gold exposures and is a CGAu SepQ Top Pick; maintain BUY.

Perseus Mining welcomes record FY23 financial performance

Perseus Mining Ltd (ASX:PRU, TSX:PRU, OTC:PMNXF) CFO Lee-Anne de Bruin talks Proactive through the company’s FY23 highlights. PRU reported revenue of $1.426 billion (up 27%) , EBITDA of $821.3 million (up 46%) and profit before tax of $568.8 million (up 103%). She says the results reflect the...

on 31/8/23