Perseus Mining Limited (PRU) Earnings Call Transcript & Summary

Thank you. Resolution 5, renewal of the Performance Rights Plan. The fifth resolution reads as follows: to consider and, if thought fit, to pass the following as an ordinary resolution that for the purpose of ASX Listing Rule 7.2, Exception 9(b), Section 613 of the TSX Company Manual and all other purposes, the directors be and are hereby authorized to maintain the Performance Rights Plan of the company known as the Perseus Mining Limited Performance Rights Plan, the PR Plan, a summary of which is set out in the Explanatory Memorandum accompanying the notice of the meeting and the grant of the performance rights and the issue of shares thereunder, be and is hereby approved as an exception to the ASX Listing Rule 7.1, provided that the company shall only have the ability to issue performance rights thereunder until November 25, 2023, whereupon the PR Plan must be reapproved by shareholders. A copy of the PR Plan is tabled for the purposes of this meeting. Again, the proxy results are shown on your screen. Overwhelmingly in favor. Are there any questions, Andrew?

There are no questions on this resolution.

Thank you. Resolution 6, approval of the issue of performance rights to Mr. Quartermaine. The sixth resolution reads as follows: to consider and, if thought fit, to pass the following as an extraordinary resolution -- sorry, as an ordinary resolution that for the purposes of Listing Rule 10.14 and for all other purposes, the issue of performance rights and the Performance Rights Plan to Mr. Jeffrey Quartermaine on the terms set out in the Explanatory Memorandum accompanying the notice of meeting be and is hereby approved. The proxy results are on the screen. Again, overwhelmingly in favor. Andrew?

There are no questions.

Thank you very much. And the last is the amendment of the constitution, resolution 7. I note that this is a special resolution, which requires a 75% majority of votes cast in favor to pass. The seventh resolution reads as follows: to consider and, if thought fit, to pass the following as a special resolution that under and for the purposes of Section 136(2) of the Corporations Act and for all other purposes, approval is given to the company to modify the constitution by making the amendments summarized in the Explanatory Memorandum with effect immediately upon passing of this resolution. The proxy results are on the screen, and over 99% are in favor. Any questions?

There are no questions.

Thank you very much, Andrew. So ladies and gentlemen, that concludes our discussion on the items of business. In a minute or 2 here, I will close the voting system. So please ensure that you've cast your vote on all resolutions. We'll now pause for 30 seconds or so just to allow people to finish any voting that there is. And then we'll close the voting. So if everybody could just take a brief pause here. We'll allow people to finish voting. [Voting]

We'll just keep it open for about another 30 seconds. If you haven't voted, please do so now if you wish to. [Voting]

Okay. Thank you, everyone. I now declare that the voting is closed. Given the time of day in Perth, the results of these wells will be released to the Australian and Toronto Stock Exchanges in the morning. That concludes the formal part of today's business, and I declare the formal meeting closed. I will now hand over to the Managing Director, Jeff Quartermaine, who will say a few words. You are still able to ask questions, which Jeff will deal with. I would normally have invited the attendees to join us for drinks and canapes after the meeting, and I sincerely hope we should be able to do that again next year. Thank you very much for your attendance and support of the company. And I now turn it over to Jeff Quartermaine, our Managing Director. Jeff?

Thank you very much, Sean, and good day, ladies and gentlemen. During the last 12 months, each of us who have been employed in the mining industry has been presented with a set of challenges that many of us have never encountered before. For us at Perseus, dealing with the COVID-19 pandemic meant that -- at this significant part of the year, been operating in uncharted waters, notwithstanding the fact that the outbreak of Ebola virus in West Africa in 2016 had previously alluded us to the possibility of a contagion posing a material risk to our business. I am pleased to be able to report that so far, Perseus has emerged from the COVID crisis relatively unscathed. And if anything, we have emerged stronger as we continue on our path to achieve our target of producing at least 500,000 ounces of gold per year at a cash margin of not less than USD 400 per ounce. And in doing so, position ourselves to consistently deliver on our corporate mission of generating benefits for all of our stakeholders in fair and equitable proportions. While the global uncertainty related to COVID-19 has made it impossible at times to guarantee ongoing strong performance, we've done our absolute best to deliver it. And in this regard, I think we've been reasonably successful. Development of our third gold mine, Yaouré, which was a very big undertaking this year given the COVID challenge, is now very well advanced, and we expect to pour our best gold at the mine within weeks inside of our stretch target of pouring first gold by the end of this calendar year. When fully operational, we expected Yaouré -- expect Yaouré to produce, on average, about 215,000 ounces of gold per year in the first 5 years of operation at an all-in site cost of USD 750 per ounce or so and have a mine life of 8 years or more based on the current ore reserve inventory. It is said that seeing is believing. So let me now show you a short video of what our outstanding construction team, our contractors and their subcontractors have achieved at Yaouré by the end of the month. So we start the video at the front gate of the Yaouré site, with the Perseus sign probably displayed. We are at the far west end of the exploration permit looking towards the east. In the foreground, you can see some old pits with water, which we'll be using for processing. We play over the waste dumps. You can see in the foreground now the old heap leach pads. Some of this material will be used for commissioning purposes. And now we can see the construction of the processing plants in the foreground. You can see in the background, there is a very large lake, Lake Kossou, which is a -- the source of water for a hydroelectric dam, which is in very close proximity to our mine site. We're now heading over the hill towards the tailings facility. This is a fully completed structure, downstream construction line with plastic to protect the environment. There's something like 500 million units of water in there already, and that water will be used for -- in the processing facility going forward. We've achieved gold practical completion on that facility today. Here is the fuel facility. That is about 950,000 liters of fuel, which will be used by EPSA, our mining contractor. And you can see that EPSA is well advanced in terms of temporary and final facilities to house their mining operations. We can see the beginning of mining here in the CMA pit. This is the main source of ore for the mine during the first 5 or 6 years of the mine. We were quite well advanced working day shift and night shift and mining at very good rates to date and excellent progress being achieved. We're now heading to the processing facility. This is the run-of-mine stockpile area, and you can see the first material on the run-of-mine stockpile. Now the material is picked up from the stockpile by front-end loader, put into the crusher and crushed and then taken by a conveyor CV1 to a crush ore stockpile. You can see that on that stockpile, there's about 50,000 tonnes of material as we speak, all ready to be put into the mill to test the mill in due course. Sitting underneath our crushed ore stockpile is the reclaim facility, a reclaim chamber and the conveyors. The ore falls through the -- into the chamber and then is in -- transported by a conveyor to the mill, as you can see in the middle of that shot there. So as we go, you can see the water dams in -- on the left-hand side, freshwater, the dense part, et cetera. You can see in the foreground, the mills, the Ball mill, the SAG mill. You can see the cyclone sitting on top of the superstructure there and then the CIL tanks, 7 CIL tanks on the right, all ready to me be receiving ore in the very, very near future. You can see at the back there, the administration buildings, warehouses, et cetera, on the left. And on the right, you can see the Yaouré substation. Now the Yaouré 90 kV substation is fully commissioned and not inoperable at this point in time. We're paying over-the-top of that, and you can see a couple of generators, backup generators in the event that we don't have power from the grid. These generators have been used in the commissioning process so far. This is the gold room and omission circuit now fully completed, ready for commissioning. This is a shot of the 90 kV Kossou substation and the cables that connect that to the plant. We're hitting over a river, the Bagoe River, which comes through from the dam, and this is the water extraction, water taken from here by the pipeline, along the cargo, the same cargo as the 90 kV electrical line runs after the plant. We have various spare lines taking up at 11 kV to outline facilities like the TSF and low security. Low security point is about a kilometer from the plant. And it's at this point that we're able to check all visitors to the site to make sure that only those with good intent come onboard. We're now looking at the magazine. This is very well advanced, the earthworks, and we're starting civil construction. That will be finished fairly shortly as well. What we're seeing now is the parts of the camp. This is -- this camp is currently housing 637 people. In full operations, about 230. And as you'd expect, we provide suitable facilities to make life a little more bearable for our workers. And you can see a beautiful camp cut into the hill, quite spectacular under lights. So that's the Yaouré development side with which we're extremely proud. And I should say that bringing on our third mine online has been a very important focus this year. And as you've just seen, it's kept us very busy. Meanwhile, ticking over in the background, our 2 producing mines, Edikan and Sissingué, have delivered improved operational performance during the second half of the year after a slower first half. We produced nearly 260,000 ounces of gold at the 2 mines during fiscal '20, with our all-in site costs averaging USD 972 per ounce. We're very similar to what we had done in the previous year. Costs were impacted by our COVID-19 measures in the second half of the year. In the June quarter, these measures added about $20 an ounce to our production costs. However, notwithstanding this, we were able to generate very strong cash flows. And from our operations, that amounted to approximately $213 million during the course of the year. We've recently outlined plans to extend the future of both of our operating mines, albeit in different ways. The current life of our Sissingué operation is relatively short. And we sought to extend this by acquiring Exore Resources Limited, an exploration company that owned about 2,000 square kilometers, a very prospective and adjacent to Sissingué. Exploration success on this ground would offer us the opportunity to either track material to Sissingué or alternatively develop the deposit into a stand-alone mining operation using the infrastructure from Sissingué. Since completing the acquisition in September, we've been conducting resource definition drilling at the 3 deposits located on the tenements. Results today are encouraging, and we expect to be able to announce an updated mineral resource in the new year and release the results of a feasibility study on developing the resources by the end of the first quarter in 2021. At Edikan, we identified potential for an underground mining operation at the Esuajah South deposit, which, as I mentioned, indicated resource of more than 500,000 ounces of gold. We are gradually progressing this work, having received government approvals in the June quarter to move ahead. The approvals allow development of Edikan and establishment of ore drives on the first 3 sublevels of the ore body, which will allow us to better assess the deposit before proceeding to full-scale development or not. We have been able to tender for underground mining services and now working our way through these offers. If this concept can be proven to be economically viable, this will be an exciting step for us as a company as it would be Perseus' first underground mine development, although many of our people are individually very experienced underground miners. Understandably, given our lack of corporate experience as underground miners, we're moving forward cautiously with this exercise, but we look forward to bringing news of this potential opportunity in the new year. As our operations grow, Perseus continues to work very hard in improving our capacity to effectively discharge our environmental, social and governance responsibilities with priority being given to supporting our host communities and governments in both Ghana and Côte d'Ivoire and in the process, ensure that our social license to operate in these countries remains in good standing. During the past year, Perseus has paid royalties and taxes totaling AUD 83 million to the Ghanan and Ivoirean governments, while also offering support to local communities through implementation of education, health and environmental programs. We have a strong local workforce at each of our operating sites, and we aim to provide training and employment opportunities at a range of levels for members of our host communities. To date, we have recorded 99% of our local employment in Ghana. So 99% of the workforce in Ghana are local employees. And 90% of those in Côte d'Ivoire are also local employees. And across the 2 sites, approximately 11% of our workforce is made up of women. We are also carefully examining ways of minimizing our carbon footprint. And in this regard, the fact that all of the power that we will use at the Yaouré -- at Yaouré, other than emergency standby power, will be generated from a renewable energy source, namely a hydroelectric power, represents a very significant step forward in this area. Looking ahead to 2021, commissioning and ramp-up of production at Yaouré is a major objective for the coming months. We're also looking forward to publishing the feasibility study for the development of a series of deposits located on the recently acquired Exore ground, resulting in extension of -- an extension of the life of the very successful Sissingué operation. We also expect to further optimize production at both Edikan and Sissingué with continuous improvement initiatives, aimed at increasing gold production and reducing our all-in site costs. We have several exciting exploration programs planned to roll out across the properties, most notably at Yaouré, as we look to deliver material organic growth at each of our 3 operating sites. Despite the challenges of the past year and the uncertainty ahead of us, it's an exciting time in our company's growth. And I look forward very much to bringing news over this in the coming year. However, before I close, I should note that in recent years, Perseus has shown itself to be a company that does not rest on its laurels. We continue to set new goals, and we continue to deliver on our promises. Our share price is starting to reflect the results of these endeavors, but in our view, still has some way to go before it truly reflects the value of your company. And finally, I'd like to pay a special tribute to the men and women of Perseus, Perseus both in West Africa and Australia. This has been a very tough year in a number of ways for many people around the globe. For our team, there was no exception. But the way our employees have responded to the challenges has been at the highest caliber. To illustrate the point, due to travel restrictions, many of our employees, including both local employees and expatriates, had no alternative but to work extended losses and to endure hardship of regularized isolation and quarantining. As well as being physically and mentally draining, this placed pressure on their families, many of whom were also living in challenging circumstances. The team responded extremely well, very, very positively, demonstrating understanding and, in most instances, good humor at the discomfort. Their contribution to Perseus has been enormous, and I know I speak on behalf of the Board, and hopefully, our shareholders, in offering a sincere thanks for our employees' outstanding service at a time of adversity. As I said, despite the challenges and the uncertainty, it's a very, very exciting time for our company. And I look forward to talking again with you next year and talking further about the goals that we have achieved in the next 12 months. So thank you very much for your attention. That brings to close this session. I'm happy to answer any questions, if there are any. Andrew, are there questions?

No questions, too.

In that case, thank you very much for your attendance, and I will bring today's session to a close. Good night.