Perseus Mining Limited (PRU) Earnings Call Transcript & Summary

Good morning, and welcome to the Perseus Mining December 2020 quarterly conference call and investor webinar. [Operator Instructions] I will now hand over to Perseus Mining, Managing Director and CEO, Jeff Quartermaine, who is joined by Group General Manager of Technical Services, Paul Thompson. Thank you, Jeff.

Thanks very much, Nathan. And may I also say welcome to this conference call to discuss our quarterly report that was released to the market earlier today. And as Nathan said, I'm joined on the line by Paul Thompson. Paul is our Head of Technical Services, and will be heading up our business growth function as we move forward, and I'll be discussing that particular matter towards the end of this presentation. Well, 2020 has been and gone. And thank goodness for that, I can hear many of you saying, it has been a very tough year in many ways for a lot of people, with tremendous financial and human costs being incurred as a result of COVID right around the globe. There's been some fairly worrying shifts in geopolitical relationships and the steady weakening of the institutions that some of us have come to rely on for many years for security and leadership. Now depressing as all that sounds, and it does sound depressing. Looking backwards from Perseus' perspective, 2020 and the fourth quarter, in particular, was not so bad. And in many respects, it was a period of very high achievement for the company, notwithstanding everything that was going on around us. Not only have our first 2 gold mining operations at Edikan, and Ghana, and Sissingué and Côte d’Ivoire performed very well, delivering yet another strong quarter of gold production. That's with the help of a buoyant gold price has allowed us to generate a material amount of cash. But in spite of COVID-19 and a volatile presidential election campaign in Côte d’Ivoire, we also managed to complete the development of our third gold mine, Yaouré. Now in the process of doing this, we've put Perseus firmly into a position where we now have the production base that will enable us to deliver on our corporate objective of producing more than 500,000 ounces of gold per year at a cash margin of more than USD 400 per ounce. So in summary, Perseus has come through 2020 reasonably well, and is now in a very good place. And as I've said before this, this is the result of a lot of hard work by our very dedicated and professional team of employees over a number of years. And may I say credit where credit's due. The team at all levels is doing very well, and long may that continue. Now for those of you who haven't had an opportunity to read the quarterly just yet, let me summarize it for you before drilling down onto a couple of important issues. Firstly, this quarter, as I said, our Edikan and Sissingué mines continued to perform very strongly. Combined the 2 mines together with the small contribution from Yaouré produced 68,614 ounces of gold at a production cost of USD 915 an ounce or a weighted average cost of USD 1,036 per ounce. Our average cash margin on each ounce of gold produced from Edikan and Sissingué was USD 651 an ounce, which exceeded our stated strategic target of USD 400 an ounce by more than 50%. And generated notional cash flow from the operations of USD 45 million for the quarter. Now on a full year basis, that worked out at around USD 150 million of notional cash flow. So as you see, that's -- it's generating quite a lot of cash at the moment. Production for the quarter was about in line with the previous quarter. In fact, I think it was like 100 ounces less. And our all-in site costs were $72 an ounce higher than the prior quarter, but this was offset by a $92 per ounce increase in the weighted average sales price achieved during the period. So that meant an increase in our margin of $20 per ounce during the quarter. Now at the same time, our implementation of our strategy for value creation through developing in-house new projects continued at pace, largely funded from internal cash resources and cash flows. We managed to complete the development of Yaouré ahead of time and under budget. And in fact, it was quite a thrill to announce on the 17th of December that we'd achieved our stretch target of pouring first gold in December 2020, 5 weeks ahead of the contracted date. Now since then, we've been gradually winding up both mining and processing activities at Yaouré. And by the time we make our next quarterly report in April, I expect that we'll be talking about 3 fully operational mines instead of 2. And all of which will, hopefully, at that stage, be producing very significant quantities of gold. Now looking to the future, the production and cost guidance for the market for the next 6 months is as follows. So we believe in terms of -- or we're forecasting in terms of production, producing in the range of 175,000 ounces to 190,000 ounces. And we're expecting to do that at an all-in site cost in the range of $950 to $1,150 an ounce. Now of the production for this current period, we're saying about 50% of that will come from Edikan, 27% from Yaouré and 23% from Sissingué. Now I do expect that these proportions will change as the year unfolds as Yaouré's mill feed becomes 100% high-grade fresh ore from the CMA pit. And for the next 6 months, this is the way that we do expect it to work out at this particular point in time. We still have a long way to go, and plenty can go wrong. But given our performance to date, so far this quarter, so up to the 18, I guess it is, I've got the data. We're very, very confident of achieving the guidance that we've provided to the market. And doing quite well. I mean certainly on a -- rolling out on a daily basis, we're well and truly -- we're in fact, we're towards the top end of that range. Now I should say this, it would be quite remiss of me that not to add a caveat to these forecasts and say that our performance -- our forecast performance is, of course, subject to what happens with COVID. Now we got through the first wave of COVID relatively unscathed. And what we are starting to see now is the early stages of what looks like a second wave of COVID. And infection rates in both Ghana and Côte d’Ivoire are steadily climbing according to the official numbers. Now we have, of course, adapted our plans to suit this new wave. And whether this is sufficient for us to remain unaffected as we were previously, does remain to be seen. But it is a real issue. And anyone who believes that we're beyond that risk or that threat is not looking carefully at the situation. Now finally, in terms of finance, throughout the December quarter, firstly, has managed to maintain its balance sheet strength through strong cash flows and prudent financial management. The cash margin of USD 651 per ounce achieved this quarter that I referred to earlier gave us the ability to generate notional cash from operations of $44.6 million or it's about $1.5 million more than last quarter. And as I said, on an annualized basis, about USD 150 million for the full calendar year. Now taking this into account and allowing for the fact that during the quarter, we invested about USD 62 million in the development of Yaouré. We funded exploration at all 3 sites. We paid income tax in Ghana. We paid corporate overheads. We paid a maiden dividend in Côte d’Ivoire and withholding tax associated with that. And we retired $20 million of corporate debt. And that left our cash and bullion balance at the end of December of USD 118 million. Now given that we had paid down our debt to $130 million, that meant that we have a net cash balance of $11.9 million at the end of the quarter, which was about $9 million more than it was at the end of September. But not a bad position to be in, given that we have largely funded the development of that mine and ended up relatively debt-free. Today at Yaouré, we have paid about $237 million in cash or 89% of the total $265 million development cost budget. And that means that there's about -- or up to $28 million remains to be paid. I mean we believe it will be less than that, but that's what will take us up to the budgeted amount. Now given that we had $118 million of cash in bullion on hand at the end of the year, obviously, the cost to complete the development is fully covered. And that doesn't even take into account the future cash flow from operations over the next 3 or 4 months, which, as I said, we believe, are going to be extremely strong. So that pretty much sums up the December quarter. As I mentioned at the outset, it's been a reasonably solid performance by the company and one that is -- sets Perseus up very well for the future. Now as usual, the quarterly report does contain an enormous amount of detail in all aspects of our business. And it is reasonably self-explanatory if you wish to look through the detail. I can't do justice to all of the details in that report on this call, and I'm not even going to try. But what I would like to do is to focus in on 2 subjects that I think will be interesting to shareholders before opening up the Q&A. These subjects are, firstly, the progress at the Yaouré mine development, I'll go into a bit more detail on that. And then I'd like to talk in more detail about our plans for future growth of the business. So turning first to the development of Yaouré. This quarter, we entered the home stretch of the development of Yaouré and local good [ thoroughbreds ]. We really powered home, so much say that we were able to achieve that stretch target of ours of pouring gold in December -- 17th of December, as I said earlier. And 5 weeks ahead of schedule, that was a very pleasing situation. Now for those of you who have been following our progress by watching the drone video footage that we've been posting on our website each month, you won't be surprised by the achievement. Things have been moving along very smartly on that site for some time. Now in fact, excellent progress has been achieved consistently since the start of construction. It's not just in the last quarter. And not only that, I'm very proud to say that it's been carried out in a very, very safe manner with minimal costs in terms of injury to our workforce. We passed a total of 5 million man-hours on the project during the quarter. We recorded over that time, a single lost-time incident, which unfortunately occurred in July. But notwithstanding this incident, it's a very credible safety record in any jurisdiction that land in West Africa. And it's a credit to the site leadership and their teams, including our contractors and subcontractors, all of whom have been working under fairly testing conditions, thanks to the COVID virus. Now I won't go through all the details of the progress on the site, chapter and verse. The results speak pretty much for themselves. But it is fair to say that strong progress happened across all work fronts during the quarter. So on the 3rd of November, we achieved practical completion on the tailings storage facility. This is a thing that we were a little bit concerned about because clearly, you're vulnerable to wet weather there. On the 12th, we had first ore to the crusher. 22nd of November, we got first power, first 90KV power into the Yaouré substation. We're able to establish permanent supply by the 27th and put first ore into the mill on that day. And on the 17th, as I said, report our first gold. So across the quarter, we produced -- we recovered about 2,700 ounces of gold, 2,687, and poured 550 ounces by month end. For me to say that the commissioning process has been faultless would -- is simply not the case. We have had the usual sorts of teething challenges that happen when you're commissioning an industrial facility like this. But nothing has occurred to date that couldn't be sold and very fairly quickly. And progressively, we're seeing the planned performance incrementally improve in all key areas, including run time, throughput rate, gold recovery and of course head grade of the mill feed. And we do expect this improvement to continue during the course of this quarter. Now whether we declare commercial production this quarter or not, or whether we wait to check performance feeding fresh ore at the mill in the June quarter, remains to be seen. But we are certainly expecting to see excellent performance from the plant, which has been very well designed, fabricated and constructed. And we look forward to keeping the market informed on progress as we go forward. Now I just mentioned the possibility of us commissioning the plant using fresh ore. Let me just explain that situation a little more clearly. Our mining contractor, EPSA Internacional, has been on site now for quite a while. They started up around August. And in this time, they've done a very good job on all the necessary equipment, trucks, diggers, drills, sliders, et cetera, are on site, and they're working reliably. They recruited and trained their workforce and the progress that they've been making in removing waste from the CMA pit and moving material from the decommissioned heap leach pads to the Run of Mine stockpile, has been very impressive. So much so that at current rates of operation, it looks very much that we will actually start mining fresh ore in the CMA pit quite a bit earlier than the originally targeted date of July this year. We think it could come a bit earlier than that. Now I'm not willing at this particular point to put an exact date on when this will occur. But if it makes sense, what we would consider doing is rather than completing commissioning, using oxide ore only, we'll degrade the declaration of commercial production, which after all is largely an accounting milestone in any event, to enable commissioning, using fresh ore as well. By doing so, we'll gain further assurance that our plan will operate to spec under any -- or under all conditions of operation. Something that is very important, given our optimism about materially extending the life of Yaouré. But more about that in a moment. So now, as we now move into full-scale operations, we're very confident that the final cost of the development will come in under the $265 million budget. I mentioned that before. We expect that all of the accounts will -- associated with construction, will have been paid or at least agreed by the end of March. So we should have a very good idea on that, where that's landed by the next time we report to the market. But certainly, my view, my expectation is that we'll come in under the budgeted amount. So all in all, Yaouré has been terrific actually, and has moved forward very nicely, under recently trying circumstances with the effects of COVID in the background. Now the next issue that I'd like to highlight before going to Q&A is very important. It's a very important matter for Perseus. And this is our strategy for continuing the growth of the company and building on the very solid start that we've made to date in building an international gold company of some substance. Now with the commissioning and progressive ramp-up at Yaouré generally running to plan, we are fairly comfortable that we are at a level where we can produce -- or we will be at a level later this year of producing at a rate of 500,000 ounces a year. But what we need to do now is to actively work to incrementally increase our inventory of mineral resources and reserves by either inorganic or organic means. Now in the short term, what that means is that Perseus' main focus is going to be on simply replacing mining depletions through organic growth while setting ourselves up for longer-term organic growth. To achieve this, the emphasis over the next 6 months will be placed on the -- on looking at near-mine deposits and working to incrementally increase resources and reserves. And we've got some very interesting projects underway there. So at Yaouré, initial resource drilling has recently been completed at the CMA South, Govisou, Angovia 2 and say Sayikro deposits. Now all of these deposits are within 10 kilometers of the processing plant. And if I'm not mistaken, all of them have been discovered by Perseus since we took over this property. Maybe Angovia 2 might have been known in the past. But certainly, the work that we've done in the last couple of years have identified these targets. Now resource potential will be assessed, particularly at CMA, Govisou and Angovia in the March quarter. Depending on results, further drilling will be completed. And if successful, then we'd expect that resources and reserves could be added to the inventory before the end of June 2021. At Sissingué -- or near Sissingué, drilling has been completed at the Antoinette, Véronique and Juliette deposits located on the Bagoé exploration permit, which we acquired last year. A DFS for the development of these deposits is scheduled to be completed by the end of this March quarter. With the expectation that additional resources and reserves could be added to the inventory at Sissingué, and materially extend the life of the mine operation there. I have to say that the delivering of resources and reserves, and the DFS by the end of March is contingent on the turnaround time of the assays that are currently at the laboratory. Things are moving fairly slowly at Côte d’Ivoire at the moment, and that could put those target dates at risk. But nevertheless, all the drilling has been done and we have received quite a few results. And certainly, we're pretty interested in what we received. And that will be put into a full study as this quarter unfolds. Now at Edikan, a drilling program completed on the Esuajah South deposit is expected to convert a modest amount of the inferred resource into ore reserve, and thereby improving the economic viability of the proposed underground project there. Drilling has also been completed recently at Mampong South, and evaluation of the resource potential and requirements for further drilling to convert to reserves will be assessed in the coming quarter. And if that stacks up the way we hope, then we will be looking to implement that program during the June quarter. So in the short term, there's quite a lot to get on with. In the medium term, beyond the June quarter, we've got several fairly large targets that have been identified for conversion to mineral resources and possibly into ore reserves. And each of these targets are also close to our operating sites but will take a little bit more work to mature. Now the preferred target for organic growth at Yaouré is clearly the CMA Underground, which we've talked about in the past as well as a number of other targets that have come as a result of initial interpretation of the 3D seismic work that was completed on the site late last year or in the second half of last year. So those targets are looking very, very interesting indeed. At Edikan, subject to gaining access for drilling, a program is planned at the Breman prospect, which is on the Agyakusu permit, where very, very significant mineralization has been identified on surface in artisanal mine workings. And that mineralization is very reminiscent of the granite ore bodies that we've been mining at Edikan now for almost 10 years. Getting access to that area is something that has eluded us for the best part of 2020. We are in competition with artisanal miners in the area. And with the completion of the electoral process in early December in Ghana, we think that going forward, we may be more successful in getting access to that land that we are entitled to do. Now at Sissingué, we also believe that aside from Véronique, Juliette and Antoinette, we believe that there is fairly significant potential on that Bagoé area that hasn't really being followed up at all at this particular point. So as well as proving up those currently known resources, we'll certainly be pushing out. And we have some very interesting thoughts around what might come from that ground as well. Now if we look further into the future, in addition to the near-mine organic growth, we believe that medium- to longer-term organic growth involves us identifying new exploration opportunities, not only in Côte d’Ivoire and Ghana, but also elsewhere in West Africa and potentially beyond. The team has -- we have established a team very capable of working in this way to identify prospective areas, particularly in areas which you've got little or no exploration history and have been underexplored. And believe it or not, there are some such areas in our neighborhood. The potential at Dompoase and the DML permits in Ghana, for instance, and also Minignan in Côte d’Ivoire. They're the first results of the implementation of our grassroots exploration strategy. The time horizon on this is clearly 7 to 10 years. So it is going to take some time, and it is going to take some investment. But we do believe that in the longer term, we can continue to fill our pipeline of development opportunities through the drill bit. Now when it comes to inorganic growth, potentially inorganic business growth, opportunities involving either mergers or acquisitions. But we also regularly assess these without using our in-house technical and commercial teams. Now given the challenges of implementing value-accretive M&A, and applying strict financial discipline when we're assessing opportunities in the current strong gold price environment, we're not pinning our hopes on this activity for delivering growth in the immediate future, preferring instead to focus on near-mine and early-stage exploration growth opportunities. It should however be noted that in the last 5 years, Perseus has executed 2 strategic acquisitions in the form of Amara Mining plc that yielded the Yaouré Project. And more recently, the acquisition of Exore Resources that delivered the Bagoé Project to the company. Now both of these acquisitions are materially added to the value of Perseus, and are indicative of the fact that we do have the capacity to successfully transact when the right opportunity presents. And therein lies the key. When the opportunity presents and when it's transactable. So it's not that we don't look at opportunities, but they have to get a fairly tight set of criteria for us to execute. The point is that having now got the Yaouré up and running, we're not rocking back on our heels and wondering what's next. We're actively involved in shaping the future of this company and doing it in a way that will be value-accretive for shareholders. Now news flow over the next few quarters will reveal progress. And I do expect that there will be a steady stream of positive news to share with you as we push forward. So in conclusion, as I said at the start of the call, the December quarter has been yet another solid quarter for Perseus as we promised it would be. We expect to push on from here. And in successive quarters, we expect to report steadily increasing production from our 3 mines. And with that steadily increasing production will come steadily increasing cash flow, earnings per share, cash flow per share. The March quarter, as I mentioned, has started very, very well at Edikan and Sissingué. And as I said, Yaouré is steadily building in all -- on all key parameters, definitely trending in the right direction. Financially, we're getting stronger by the day as a result of that solid production containment of costs. And of course, the strong gold price, which I noticed this morning had a very nice little bounce. Exploration-wise, it's clear that from what I've said that we have a clear plan ahead of us. We have a budget, and we're getting on with the task of organically growing our business and creating value for shareholders. And in our opinion, it's really only a matter of time now before the quality of Perseus' performance and earning capacity, not to mention the asset base, is recognized by the broader market. I sincerely hope at all existing shareholders and all prospective shareholders listening to this teleconference, will be on board for the journey because it should be fun. So thanks very much for listening. And now very happy to take any questions that you might have. Thank you.

Thank you, Jeff. [Operator Instructions] Jeff, your first 2 questions are from Nick Herbert at Crédit Suisse. The first question is, can you comment on Yaouré mined grade reconciliation versus block model.

On no particular thing at this particular -- like today, the answer is no. We're putting through the oxide material coming from the heap leach. And as anyone who has processed gold heap leach material on those is that from one day to the next, the grade bounces around a fair bit. But overall, it's generally in line. So we haven't completed a full formal reconciliation. We do track it day-to-day, and it is reasonably in line with our expectations, which is pleasing. Some days, we get spectacularly good grade. Other days, it's not as good. But overall, it's generally tracking properly.

Thank you. And just the second one from Nick. Can you talk to the program of works at Exore's ground beyond March quarter? How are you thinking about first conceivable contribution from that ground subject to DFS results? Is that at the end of Sissingué's current mine plan or concurrently?

Yes. No, what we're looking there. So the process going forward for those 3 deposits is that, as I said, we've done the drilling. We're waiting for results right now. We're waiting for the full set of results. And as soon as those are all together, we'll finish the resource estimate and do an optimized mine plan. And we expect that all of that will be done by the end of March. But as I said, the results are dribbling through. We're also running concurrently a group of consultants are preparing our environmental and social impact assessment. That will be completed in the next couple of weeks, I would expect. And all of this together will then be put together into the feasibility study, which will be submitted to the Minerals Commission. Hopefully, by the end of March. Now we think that from that point forward, it will probably take about 12 months or so to go through the approval process of the government, and that's what we're working to a time line like that. While that's occurring, we'll be finishing the mining at the Sissingué deposits and moving over to Fimbiasso, which is a satellite deposit that's located within trucking distance of Sissingué. Now that has about, in total, about 18 months or more to go from now. So we would think that we could -- it's quite possible we'll extend that beyond that. But what we would ideally like to do is to finish mining in Fimbiasso having proven up our ability to truck ore back to the Sissingué processing facility. And then when that's done, move the trucking operation down to the Véronique, Antoinette, Juliette deposits, et cetera, et cetera. And just simply continue to move material back to the processing facility. Now that's the plan as far as the 3 known deposits are concerned. As I mentioned when talking about organic growth, we'll -- during that entire period, we're working on it on exploring around those deposits and we're seeing what sorts of extensions we can find there. But also to stepping out a little bit further and maybe replicating those deposits further away on the Bagoé tenement. But I think the work is set out ahead of us. So we are very excited about that actually. I mean the Sissingué mine is -- the operation there is extremely efficient. We've got a great team of people. We've got good relationships in the community. And having the opportunity to extend the life of that project significantly is actually, it's quite a bonus for Perseus. Because while Sissingué is relatively small in terms of ounce contribution, it does generate a lot of cash because the costs are relatively low. And it's something that we would like to continue doing for as long as we possibly can.

Your next questions are from Reg Spencer at Canaccord. He said, for the first one, is there a risk the Fimbiasso permit may not be granted when expected? Is there a risk of a production gap?

Okay. Let me just address that first. Yes, look, there is a risk. However, we do expect that, that license will be issued, if not this week, then next week because there's -- when I say the CIM Committee of Ministers meetings, regularly scheduled -- or sorry, this week or 2 weeks from now, when they have the next one. They're doing meeting every 2 weeks now in Côte d’Ivoire. And we're expecting it at any moment. We were expecting to get that license late last year. However, the presidential election got in the way. And things put on the back burner while they all went out and did their engineering. But the government has got back to work since then, and we will be on the agenda either at this current meeting or the next, we believe. So we don't -- we're not anticipating a big delay. I mean, if you look at it from the government's perspective, if there was a delay in the licensing being granted in a gap in our mining. I mean the potential would be that Sissingué would come to an end. And with that would be the 500 or so people who are employed directly or indirectly around the Sissingué mine would no longer have work. The benefits that flow freely to the local trust fund to build infrastructure and support livelihood, et cetera, et cetera, would come to an immediate halt. And I would think that the community would be very unhappy with the government if that was to happen. So certainly, we have the support of the community. I believe we have the support of the elected official and the bureaucracy. And it's really just a matter of time to allow processes to follow the course. But to answer your question directly, is there a risk? Yes, there is a risk, but we believe that, that's fairly minimal.

The next question is regarding resource drilling at Bagoé. Are you seeing any major delays with assay turnaround? Is there a risk of this on time lines for the project?

Yes. Well, as I mentioned, we have seen -- it has been a little bit slower coming through the lab, certainly since the start of the new year. And then this is something that I did mention earlier on as a risk. We would like to think that things will stack up now as January is unfolding and that we'll get those back fairly quickly. But if the DFS isn't completed in March, it will be completed fairly shortly thereafter. And I think we've been in reasonable shape. I'm not sure -- Paul was having some audio challenges. I think -- I'm not sure if he's...

I'm on the line now, Jeff.

You're on the line. Paul, I think that's correct. I said, if we don't get finished at the end of March, it won't take hugely long after that to finish that work.

Yes. Our turnaround times are about 5 weeks at the moment in assays, and the last ones went off last week. So we -- it will be sort of the end of March, sometime in April, probably when we finish based on that.

Thank you. The next question from Reg is can you please repeat those asset splits you mentioned at the start of the call for the second half 2021 guidance.

Sorry, I'm not quite sure I understand that question.

He asked if you could repeat the asset splits you mentioned at the start of the call for the second half of 2021 guidance.

Well, we haven't given the assets. I'm not sure the asset split. What I said was this, the guidance for the first half of the year, so up to June, is 175,000 to 190,000 ounces, and that will be split 50% Edikan, 27%, 23%. Now I didn't -- I haven't given guidance for the second half of the year at this particular point in time. But I can say this without going too far off-line here that the second half will produce quite a bit more gold than the first half of the year. The reason being is that the second half of the year will be a -- we will -- for the entire 6-month period, be processing ore from the CMA deposit, which is the high-grade deposit at Yaouré. And the contribution from Yaouré will increase quite significantly in that period of time. So as a result of that, Edikan's relative proportion will drop and as well as Sissingué. But I might say that actually, Edikan has got a fairly strong second half coming up as well. But we haven't put that data into the market as yet. As we firm that up, and as we get more confidence in the way the plants are running, et cetera, et cetera, we'll share that with the market.

Thank you. And the last one is Esuajah South Underground still achievable in 2022?

Esuajah South Underground is certainly achievable. Where we sit right now is that, as Paul could tell you, we have finished the extra drilling we did. We've just recently completed further conversations with prospective mining contractors and have received revised pricing on the underground mining. And in the next week or so, that new data will be fed back into our models, and we'll look at the economic viability of the project. Now if it stacks up, then there's no reason why we couldn't go forward straight away because all the design has been done. People have been moved from the area with the area of expense, et cetera, et cetera. We are ready to move forward. But look, it comes down to a question of capital allocation and where can Perseus best deploy its funds to generate the best outcomes for shareholders. So if the economics at -- on Esuajah South are marginal, we may take the view that we're better served putting our money into another venture rather than going there. But I don't want to preempt that decision one way or the other. We want to look at the facts first before we can make the decision. Now the reason why it has been delayed from the original schedule is that there have been some changes in terms of labor regulations in Ghana in terms of the use of local labor in underground mining operations. And we want to make sure that our mining contractor, whoever that may be, has properly allowed for all of those regulatory changes in the pricing that they've given us. There is absolutely no upside whatsoever for anybody in making a mistake on that. And then getting into the operation and finding out that it's costing more from a labor point of view because at the end of the day, someone's got to pay the cost. It's either us or it's the contractor. And we prefer that we not be settled with that particular incremental cost. So it is important that we check this out and that we have a very clear understanding contractual relationship with the contractors so that it's -- there's no misapprehension as to the allocation of costs as we go forward. Now if we can achieve that, then we'd be delighted to get on with Esuajah South, not only because it adds obviously to our production and cash flow in the immediate term. But also what it does as a company is that it gives us a relatively low-cost, low-risk on-trade to underground mining. All of our pits so far have been open pit. But we do know that the prospects of having a significant underground mine at Yaouré are quite large. And what we would like to do, I guess, is to make sure that we, as a company, are up to the task of running a large underground mine or a prolific underground mine before we actually get to that particular point. So in some sense, this is an opportunity for us to cut our teeth just as the developing Sissingué was an opportunity for us to cut our teeth in Côte d’Ivoire, and we followed that on with the Yaouré development. The Esuajah South we see as an opportunity for us to get familiar with the running underground mines as Perseus. I must say that we've got a lot of people like in our staff who have got absolutely wealth of underground mining experience individually. But we, as a corporation, haven't done it before. So from that point of view, it is something we would like to do. But as I said, we want to make absolute sure that we know what we're doing before we move down in that direction.

Thank you. There are no further questions at this time. So I'll now hand back to Jeff for closing remarks.

Okay. Thanks, Nathan. And thanks very much for listening to this call today. As I said, it has been a good quarter for us. We are in a very good place. We're very, very excited about the future. And we would certainly encourage you to continue supporting the company. And those who aren't shareholders taking a very good look at it because I think this represents extraordinarily good value where we're currently positioned and where we're going. So thank you very much, and we will speak again at the end of the March quarter.