Perseus Mining Limited (PRU) Earnings Call Transcript & Summary

Welcome to the Perseus Mining Investor Webinar and Conference Call. [Operator Instructions] I will now hand over to Perseus Mining CEO and Managing Director, Jeff Quartermaine. Thank you, Jeff.

Thanks very much, Nathan, and welcome to Perseus Mining's Webinar to discuss our full financial year '22 results. I'm joined on the call today by my colleague, Lee-Anne de Bruin, our Chief Financial Officer, who will take you through the details of the financial report that was released this morning to the market, and she will also be available later in the call to answer any detailed questions that you have about either the financial results or indeed a very comprehensive financial report. I'm also joined on the call by Paul Thompson, our Head of Organic Growth. Paul will be available later in the call as well should there be any questions about the releases that we put out yesterday concerning our resources and reserves and Sissingué underground in particular. Before passing to Lee-Anne though, let me just say that fiscal '22 has been an excellent year for Perseus as we've consolidated our transition to now being a highly profitable molly mine, molly jurisdictional company that consistently delivers on our promises. Our production during the year of 494.014 ounces of gold at an all-in site cost of USD 952 an ounce ranks very favorably with compared to our peers both here in Australia and internationally. We have fired our next multimillion ounce gold development projects through the acquisition of Orca gold during the year. And as Lee-Anne will tell you, we've just delivered a record financial performance as measured by both cash flow and earnings. Pacing process in a strong position to continue what has become one of the better stories in the Australian gold space. But enough of this, let me now pass over to Lee-Anne to tell you exactly what has been achieved in fiscal '22. Lee-Anne, please?

Thanks, Jeff. And now you can see, the operational production has delivered a record performance in Perseus' key financial metrics, which I will talk to in a little bit more detail. But in summary, Perseus for FY '22 has delivered a milestone revenue of AUD 1.1 billion, up at 66% on the financial year 2021. And this has delivered a profit after tax of $280 million, up 101% on last year. Operating cash flow is up 73% from last year at $523 million, positioning the group well for repayment of debt, delivery of our growth strategies and returning to shareholders via a declaration of a final dividend of $0.164 per share. As mentioned earlier, the revenue is up 66% to $1.1 billion, and this has resulted in an EBITDA of $564 million, up 86%. This was a result of the higher gold prices combined with higher production due to full year contribution from the Yaouré gold mine. The Yaouré contribution was offset by an underlying expected reduced production at Sissingué gold mines and the underperformance at Edikan. The revenue increase translated into excellent growth in all Perseus' earnings metrics with gross profit from operations up 75% at $350 million. A slightly deeper dive into these strong growth earnings metrics, namely profit after tax of $280 million, which is up 101%. It's worth noting that following material inclusions. Cost of sales increased by 49%, reportedly less than the 66% increase in revenue and this was due to the increased production coming from Yaouré, which achieved an all-in cost of USD 668 per ounce during the FY '22 financial year. Income tax decreased by $23 million due to lower profits from Edikan. Depreciation and amortization increased by $214 million, 107% up and this was predominantly due to the amortization of the Yaouré gold mine for a full financial year-end when compared to early 3 months in FY 2021, and that was obviously due to the declaration of commercial reduction in March '21. The increase in profit after tax was achieved after recording impairments of $43.4 million as well in 2022 compared to the FY '21 impairment of $6.8 million. An impairment assessment was prepared in relation to the Bagoé project due to the finalization of the related feasibility study and a conclusion in the Sissingué Life of Mine Plan during the year. An impairment of $33 million was proposed -- was processed in relation to the Bagoé project, with the balance of the carrying value being transferred just under construction as part of the Sissingué Gold Mine project moving forward. The remaining $10 million of impairment relates to right-offs in relation to unsuccessful exploration of near-mine targets at Sissingué and Edikan. The earnings per share has increased up by 96% to $0.187 per share, and this is taking into account the weighted average impact of additional 125 million shares issued as part of the Orca transaction. And our oiling ounce was up 34% at $582 per ounce of the 50% increase in ounces produced on last year. The growth in cash flow. Similar to our strong earnings metrics, the operational performance has delivered excellent growth in Perseus' cash flow metrics. Operating cash flow from operations was up 73% at $523 million, generating operating cash flow per share of $0.42 per share and $1,058 per ounce. The growth in cash flow has positioned Perseus well to invest in growth strategies as exploration in Orca are -- sorry, in growth strategies such as exploration and Orca during 2022. Moving on to our balance sheet. The group ended the financial year with a strong balance sheet, including cash and bullion balances of $476 million and interest-bearing debt of USD 50 million. This cash and bullion balance is after investing cash flow of $166 million, including the initial Orca acquisition and of AUD 30 million and exploration of $55 million. It's worth noting that we've made a subsequent payment on our USD 25 million in August 2022 on the corporate revolving facility, living a drawdown balance of USD 25 million and an available drawdown of USD 125 million. Net tangible assets are at $1.2 billion, up 28% on previous financial year and producing a net tangible assets per share of $0.87 per share. Looking forward to financial year 2023 Perseus guidance for the 6 months to December '22 remains unchanged with the focus remaining on the corporate objective of delivering 500,000 ounces per annum at a cash margin of not less than USD 400 per ounce. Perseus is guiding for the 6 months to December '22, 240,000 to 265,000 ounces produced at an average all-in site cost of USD 1,000 to USD 1,100 per ounce. Our continued focus in FY '23 will be driven by the strong contribution from the Yaouré Gold mine, significant reduction in capital expenditure and balance sheet management initiatives. We will continue with fiscal discipline in what is an ever-changing fiscal and cost environment. And our dividend policy will remain focused on disciplined return to shareholders while maintaining a balanced capital structure and capacity to fund our corporate growth objectives. So that then brings me to the Perseus' dividend operation or final dividend for FY '22. Giving consideration to Perseus' strong performance in FY '22, the Board of Perseus has declared a final dividend of $0.164 per share, which is a cumulative of $22 million returned to shareholders. This is in addition to the FY '22 interim dividend paid in March of $0.081 per share, a cumulative of AUD 10 million and an annual yield of 1.5%. The final dividend of $0.164 includes a bonus dividend of $0.079 per share or 0.5% yield over the 1% sustainable dividend policy. The cumulative return to shareholders since August '22 last year is AUD 50 million, which includes the capital reduction, the FY '22 interim dividend and this FY '22 final dividend declaration. That brings us the end of the presentation of our financial results. So I'll now hand back to our CEO, Jeff Quartermaine.

Well, thanks very much, Lee-Anne. That was a very comprehensive summary. Now before opening the floor to your questions, can I please take this opportunity to give you a bit of an update on what we've actually achieved at Perseus since the end of the financial year. I'm aware that following the release of our last quarterly report, a few of our investors raised concerns about the challenges that we reported at Edikan last quarter. Now I'm delighted to tell you since we restarted our mill at Edikan following the maintenance shutdown in June, everything has gone exceptionally well. And in fact, in July, Edikan recorded the best month of gold production since December 2018. And the way August is shaping up, expected August will be better than July. By around the middle of August Edikan had actually passed its total June quarter production. So the operation is very well placed to achieve, if not exceed, guidance both this quarter and in the December '22 half that Lee-Anne just mentioned. We're not to be outdone, Yaouré continued to outperform all of our expectations as had Sissingué. It just keeps floating away beating budget month in, month out. So production-wise, and in terms of all inside costs were in very good shape, having started the quarter very strongly, and we're looking forward to reporting another excellent quarter in October in [indiscernible] say in our new home in Sudan. On the organic growth side of things, the CMA underground is shaping up very well. Now we released details of an initial ore reserve for CMA underground yesterday. I should stress that these results relate only to the first 200 meters down dip. We have a bit of infill drilling to be done to extend the reserve. But from step out holes that we have drilled, we've confirmed the continuity of the CMA structure for at least about a kilometer down dip and have noted that mineralization also continues. So that's pretty exciting. Our big drilling program at CMA, which is investigating what lies depth beneath the structure, is in its infancy, but the first couple of holes that we've completed have returned some really interesting results. And you'll certainly be hearing more of this before we're done. In terms of our next development project in Sudan, this is also looking very good, where we've been doing a lot of preparatory work before striking out on the ground. We're ready to say the drilling contract with a very highly reputable drilling company with significant global experience, including across Africa, and they should be mobilizing to site within weeks. Their job will be to perform an infill drilling program aimed at materially increasing the mineral resource and ore reserve and also doing sterilization drilling ahead of construction of mine infrastructure. We've been working very closely with the Sudanese government to put in place all of the structures and mechanisms needed to cost efficiently important equipment necessary to start preparing the [indiscernible] infrastructure ahead of an influx of drillers and later on, construction workers. We couldn't be more pleased with the level of support we're receiving in Sudan from the very highest levels of government, and we're very, very excited about what hit or lies ahead of us on that project. So not only of the financial results for fiscal '22 that Lee-Anne has described being excellent, but we're very pleased to say that the strong performance that delivered those results is continuing into the new year, and our shareholders can certainly look forward to the continuing strong results in the periods ahead said. But thank you very much indeed for your attention today. This brings our presentation to a close. And now Lee-Anne, Paul and I are happy to take any questions that you may have in relation to either these results or any other aspect of Perseus' business. Thank you very much.

[Operator Instructions] Your first question comes from Reg Spencer at Canaccord. Say congratulations on a good year. My question relates to the Yaouré CMA Underground. Your notes in yesterday's announcement included a maiden reserve for the underground. Can you help us understand what development timelines and production scheduling might look like?