Perseus Mining Limited (PRU) Earnings Call Transcript & Summary

Good morning, and welcome to the Perseus Mining investor webinar and conference call. [Operator Instructions] I'll now hand over to Perseus Mining Executive Chairman and CEO, Jeff Quartermaine. Thank you, Jeff.

Thanks, Nathan, and welcome to Perseus Mining's webinar to discuss the company's results for the financial year ending 30th of June '24. I'm joined on this call by Lee-Anne de Bruin, our CFO, who will be presenting to you today, but before passing to Lee-Anne, let me first provide some context to the reports that have been filed with the ASX and the TSX and to which Lee-Anne will speak in just a moment. Now as you're aware, in late July, Perseus published its June '24 quarter report that documented the results for the fiscal '24 year from our 3 operating mines and 2 development sites, all of which are located throughout the African continent. Now in summary, these results demonstrated that once again, Perseus has done what we said we were going to do in an operating sense by producing nearly 510,000 ounces of gold at an all-in site cost of USD 1,053 an ounce. Now these results have been achieved exclusively on the African continent and have firmly established Perseus in the upper echelons of gold producers in Australia and India and the world. Now the annual report that's been published today combines both our fiscal '24 financial report and our fiscal '24 sustainability report for the same period, and they confirm that both in terms of finance and sustainability, our performance has indeed been very strong and has allowed us to once again comfortably deliver on our corporate mission, which is to generate significant benefits for all of our stakeholders in fair and equitable proportions. I will now pass to my colleague, Lee-Anne, who will expand on this statement by speaking specifically to the financial and sustainability results, and following Lee-Anne's presentation, I'll add some insights into our recent activities in the area of organic and inorganic growth and hopefully provide a view of what the future holds for our company. We'll then open the floor to any questions that may arise. So over to you, Lee-Anne, please.

Thanks, Jeff. It gives me great pleasure to present our financial results, which is a combination of [indiscernible] our team in Africa and here in Australia. I'll start by focusing on our excellent results for the financial year. I make the point upfront that all of our results are presented in US dollars, with the exception of when we talk about dividends per share. Gold produced was slightly down on FY '23 at about 510,000 ounces, but it did come in against our guidance range of 471,000 to 517,000. All-in site cost was slightly up at USD 1,053 per ounce, impacted by a 5% lower ounces produced largely at Edikan and Yaouré, and then an increased production cost driven predominantly by the increase in royalties due to higher gold price. Average gold sales price achieved for the month -- sorry, for the 12 months, was USD 2,014 per ounce, which is up USD 211 per ounce on the previous financial year, but slightly below the average spot rate for the 12 months. Increased gold price has resulted in a USD 961 per ounce cash margin, and notional cash flow of USD 490 million, which is up $38 million on our prior financial year. As you would have seen in our quarterly reports, Perseus ended the financial year with USD 587 million on the balance sheet in cash and bullion. Turning to our financial metrics. We generated USD 1 billion in revenue, which is 7% up on our prior year due to the increase in gold price per ounce. Profit was, before tax, up 22% at $467 million, and profit after tax of $364 million, after making contributions to our home government through income tax and withholding tax on dividends. The operating cash flow generated was USD 429 million, contributing to a 9% increase in our net tangible assets to USD 1.2 million, and Perseus' Board is pleased to announce a final dividend declared for FY '24 of AUD 0.0375 per share, which delivers a AUD 0.05 per share for the full year. So that strong operational and gold price performance has generated a strong growth in our earnings, with EBITDA up 13% at $625 million, gross profit from operations up 19% at $483 million, and these results have culminated in a basic earnings per share of $0.2362 per share, and importantly, an earnings per ounce of USD 717, up 20% on last year. And we always have a strong focus on generating cash to support our growth agenda. Perseus generated cash flow of $429 million this year, which equates to operating cash flow per share of $0.3126 per share, and an operating cash flow per ounce of USD 844 per ounce, up 6%. Showing our quarter on quarter performance, Perseus has averaged 513,000 ounces of gold at an average all-in site cost of USD 988 for the last 3 years, something we're extremely proud of, and we've also remained reasonably stable in the all-in site cost area despite inflation -- strong despite an inflationary environment, and this has allowed for increased margins in our rising gold price environment. Looking towards our balance sheet. We still remain undrawn on our USD 300 million debt facility. Total assets now stood at USD 2 billion, with net tangible assets as previously mentioned at USD 1.2 billion, and this generated a net tangible asset per share of USD 0.89. Our balance sheet, as you can see, is well positioned to fund our organic growth aspirations, and including our development of our CMA Underground at Yaouré, and the Nyanzaga Gold Project in Tanzania. We always pride ourselves on delivering to promise, and we continue to execute our business plan and deliver against our guidance. The all-in site cost, which is the cash cost, fell below guidance, partially impacted by the underperformance of the mining contract Yaouré during the financial year. The mining deficit is being remedied, and will impact the mining costs, and hence, all-in site costs in Q1 of F '25 hasn't been reflected in the guidance for the 6 months for that period. So if we reflect on our guidance, for that FY '24 financial year, we delivered 519,000 ounces at the top -- sorry, 509,000 ounces in the top end of the full year guidance and an all-in site cost of USD 1,053, which for the full year guidance, puts us at the midpoint for the year. And turning to the future, guidance for the 6 months ended December '24 has been set between 220,000 and 260,000 ounces, and all-in site costs of $1,230 to $1,330. This reflects the increased mining that will occur in Yaouré in Q1 FY '25 so as to remedy the FY '24 deficit, and slightly lower output produced in Edikan as we transition to the [indiscernible]. As communicated in July, Perseus has generated significant quantities of free cash, given gold production, elevated gold price and [indiscernible] all-in site costs. And we did -- as mentioned earlier, we generated $424 million in operating cash flow after paying $12 million to our government shareholders in dividends, and USD 110 million in income tax and withholding taxes in Ghana and Ivory Coast. We have now a clearly articulated plan to improve the quality of our asset portfolio through a combination of organic growth and opportunistic M&A. In FY '24, we invested, as you are aware, USD 195 million in the Nyanzaga ore deposits. which was made up of the [ $32 million ] was our initial investment in the 19.9% in OreCorp, followed by the $144 million paid for the remaining shares, and subsequently $16 million paid to the Tanzanian government and change of control taxes. We've also invested further in our organic growth near existing operations of about USD 39 million, which includes the [indiscernible] resettlement program. We also invested in the Predictive assets in FY '24 in equity swaps, and you will have seen our announcement where we've invested a further $54 million to buy a further 13.82% relevant interest in Predictive in August '24. At June '24, Perseus had a liquidity position of $887 million, including our USD 300 million for undrawn facility. Giving consideration to you that capital allocation framework and liquidity position, the Perseus Board has declared an FY '24 final dividend of AUD 0.0375 per share, a total distribution of AUD 52 million. And this brings our total shareholder returns via distribution for FY '24 to AUD 0.05 per share, including the AUD 0.0125 per share we paid in April this year. Perseus has thus returned AUD 160 million to shareholders in 3 years, and we're also pleased to say that the Board has [indiscernible] announced intention to undertake an on-market share buyback of AUD 100 million, which will commence on or about the 24th of September '24, and the completion within 12 months. That brings me to the end of the financial. I'll just briefly touch on our sustainability performance, which Jeff has just previously mentioned. We also released our sustainability report this morning. Safety performance has improved across the group, with a strong focus on our Safely Home Every Day or SHED program, as we call it, and the deployment of our Fatality Risk Management program with our employees and importantly, our contractors. Community, a big focus for us and our social license to operate. We have made economic contributions increased by 17 -- sorry, by 7% to USD 717 million, which represents 89% of our procurement. We made $3.6 million in community contributions, and our local and national employment remained stable at 96%, with female employment stable at 12%. We basically had one significant community event during the FY '24 year. On the environmental side, Scope 1 and 2 greenhouse gas emissions intensity per ounce of gold produced increased slightly, but that's largely due to the slight decrease in gold produced, and we had 0 significant environmental or tailings dam integrity issues. Well, thanks very much. And I'll now pass over to Jeff to take you on an update on some of our growth areas.

Great. Thank you very much, Lee-Anne, for that excellent presentation. Now turning briefly to the subject of growth. Now in the last 12 months, as Lee-Anne has already mentioned, we have been very busy here at Perseus in the area of business growth. Our exploration teams have been busy in and around the existing projects, replacing, where possible, ore reserves depleted by the operations. In addition to this, we've been busily planning the extension of the Yaouré Gold Mine with the CMA Underground development project. and also preparing to develop the Kousso open pit mine, which is located adjacent to the Edikan milling operation. We've also acquired the multimillion ounce Nyanzaga deposit, which is located in Tanzania, and we're busily preparing as we speak for a development decision on that particular project later in the year. And subsequent to the end of the financial year, as people would be aware, we switched our 9.9% stake in the Koné Gold Project in Côte d'Ivoire for a 17.4% stake in the even more promising Bankan Gold Project in Guinea. So it has indeed been a very busy year for us, and the results of this work will become very evident in years to come. Now looking briefly at the progress we have made on a couple of these projects. So first of all, the CMA Underground project. This is one that is tracking towards a final investment decision in October of this year, although at this particular juncture, we're extremely confident that things will move ahead as planned. We've been busily recruiting a very, very well-credentialed team of people to build and to run this operation, and been looking to onboard an underground mining contractor. Of legislation in the country, this is the first underground mining operation being contemplated in Côte d'Ivoire. It's likely that we will commence operation under the auspices of a ministerial decree, allowing us to move forward, with legislation to follow shortly thereafter. The environmental impact, environmental plans, et cetera, are currently being reviewed to see if there is any impact of the underground operation. We don't believe there is, but that will be something that will follow. In terms of the pre-FID activities, the underground mining tender is certainly taking a lot of attention. We have received tenders from a number of world-class contractors. We have shortlisted that down to 3, and we're in the process of normalizing those tenders and there is -- the likely winner of that will be, first of all, a very highly credentialed, well-performed international money contractor, and they will be doing another price that makes this project a very much an economic proposition for us. By getting [ foot ] ready in terms of infrastructure, various other bits and pieces and preparing, very importantly, to integrate this underground operation into our existing open pit operations to ensure that there's no difficulty in that respect going forward. As I said, we're looking at the final investment decision being taken in October this year. We will move very rapidly into upgrading various mine services. The contractor will mobilize around March, April next year, and we will start portal works around July. Now as soon as we do go into the underground mining, we will be recovering some mineralized ground, but we won't be reaching formal commercial production as defined by the accounting standards until April '27. But nevertheless, we will be recovering mineralized material that can be processed right from the start. So it's a very exciting project for us. Looking forward to that one very much. Now in an inorganic sense, the Nyanzaga project is one that we acquired an interest in earlier this year. This is an extremely exciting opportunity for us located in a mining precinct that has delivered an enormous amount of gold and subsequent wealth for many, many years. The thing that is extremely pleasing about what we've experienced in Tanzania since we have taken control of the project is that we've had an enormous level of support from the Tanzanian government, which has allowed us to move forward on a number of fronts heading towards the financial decision later this year. We do already have full key licenses that are required to operate, and we are currently pursuing several parallel paths to that FID decision, that includes resource definition drilling, where the drills are on the ground rolling and assays being attended to. We're conducting a series of feasibility studies, technical studies. Front end engineering has commenced as well as site works on the site itself. And in fact, I believe that the first relocation houses, construction of these will be commencing in the next day or 2, certainly by the end of this week, the moment the contractors have been mobilized there. Once again, turning to the schedule for this. As I said, we're looking to have the final investment decision made in December this year. We will move into works very rapidly on the ground. As I said already engaged in early works, relocation, housing, et cetera, et cetera, but major works will commence in the -- in January, in the new year, culminating in a commissioning period towards the end of '26 and first gold and ramp up in the first quarter of '27. So that's an extremely interesting and exciting opportunity for us, and we believe that the Nyanzaga project is going to be a significant contributor to Perseus for many, many years to come. Now to say that we're excited by what's happening at Perseus is an understatement. And I don't intend to talk endlessly on the subject, but let me just say this. Perseus has indeed had a very good year on all fronts. Over the last 12 months or so, we've received a considerable amount of advice from all manner of stakeholders on how we should manage our capital to best suit their personal aspirations. We've listened very diligently to this advice, and as Lee-Anne has capably described, we've determined a capital management strategy that we believe should meet the expectations of most, if not all, reasonable shareholders. At the same time, we have prudently maintained adequate balance sheet strength to not only withstand unexpected changes in our operating environment, but also to enable us to meet our social license obligations and also finance the upgrading of the quality of our asset portfolio, and in the process, provide us with the potential to deliver future growth for the benefit of all stakeholders. So looking forward, we expect that Perseus will continue to perform in this -- in a manner that is very similar to that of the last few years, and where possible, we'll be striving to continuously improve so that we can deliver sets of results, at least on a par with those that have been spoken about today. Now finally, it would be quite remiss of me not to acknowledge the contribution made to the success of Perseus over the last 12 months.by all of the men and women from many different countries, ethnic and religious backgrounds, that make up the entire Perseus team. And irrespective of where these people sit in our organization, they have once again done an outstanding job. And in every sense of the word, our team walks the talk by proudly living our corporate values that include teamwork, integrity, commitment and achievement. The reports that we've delivered to you today are clear proof of this, and I'd encourage you all to take the time to read them very carefully and to learn just what a terrific company that Perseus Mining has become. So thanks very much for your attention. This brings our presentation to a close. And now, Lee-Anne and I are available to -- and happy to take any questions that you may have.

[Operator Instructions] There are no questions at this time, so I'll now hand back to Jeff for closing remarks.

Okay. Well, I hope that means that the system for asking questions is functional. But nevertheless, hopefully, no questions means that our presentation has addressed all of the things that have come to your mind. But certainly, as I said, it's been a very good year for us. We're pleased with the results, and we intend to continue to deliver more and more of these in years to come. So thank you very much for your attention today and look forward to speaking to you again in the future. Thank you.