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, Managing Director and CEO, Craig Jones. Thank you, Craig.

Thanks, Nathan, and welcome to Perseus Mining's quarterly webinar to discuss the June 2026 quarter report. I'm joined here today with our Chief Financial Officer, Lee-Anne de Bruin. And this quarter marks the close of the 2026 financial year, and it's been another period of solid operating performance from our 3 operating gold mines with strong cash generation, along with continued progress on our organic growth projects. Looking at our operating performance. So we produced 109,000 ounces of gold which was up 1,869 ounces on the March quarter and the higher production was achieved across 2 of the 3 operating gold mines. The weighted average production cost was USD 1,340 per ounce and the all-in site cost was USD 1,941 per ounce. The comparable all-in sustaining cost for the quarter was $1,865 an ounce. Gold sales from the 3 operations totaled 114,567 ounces, which was 18,000 ounces more than the quarter 3 of the financial year. The realized gold price was USD 4,086 per ounce, and our average cash margin for the quarter was USD 2,145 per ounce, resulting in a notional cash flow of $216 million. And we finished the quarter notably with over $1 billion in cash and bullion. For -- looking at our performance across the FY -- the 2026 financial year, we produced 405,000 ounces of gold at an all-in site cost of USD 1,750 per ounce. Gold sales from all 3 operations totaled 399,000 ounces with an average realized gold price of USD 3,693 per ounce, which is $1,150 per ounce more than the financial year 2025. Our average cash margin for the year was USD 1,943 per ounce, which was $635 per ounce higher than the '25 financial year, resulting in a record notional operating cash flow of $769 million from all operations, $119 million higher than financial year 2025. If we turn now to Yaoure overall gold production from the open pit and the CMA underground was 38,900 ounces of gold at an all-in site cost of $2,277 per ounce. The Yaoure open pit produced 30,440 ounces, and the CMA underground produced 8,472 ounces. Overall, processed head grade was lower than planned at 1.13 grams a tonne down from 1.29 grams a tonne last quarter, and this is for 2 reasons: firstly, access to the higher-grade Yaoure Stage 1 area was limited as a result of high rainfall. And secondly, we mine the oxide section of the Zone 2 deposit in June, which returned grade that was lower than planned. Sustaining capital was higher, reflecting timing of works on the new community road, which is part of the waste dump extension and the replacement of the tailings pipeline. As I mentioned earlier, the quarterly production for the CMA underground was 8,472 ounces, which was up 1,600 ounces in Q3. And the overall gold sales total for the site totaled 39,000 ounces at USD 3,920 per ounce, including 7,252 ounces sold from production at the CMA underground and Yaoure are produced a notional cash flow for the quarter of $50 million. On the CMA underground, this was Landmark quarter for the CMA underground. We have advanced 3,604 meters of lateral development across the 4 declines to date. And critically, we commenced stoping in April with 3 states completed delivering 33,606 tonnes of ore. Preparations commenced for the installation of the primary ventilation fans and the expansion of the generator farm with contractor engagement for civil structural steel works. Project development progressed well with USD 89.6 million spent by 30 June 2026. So whilst CMA underground started later than we initially planned due to the permitting delays, the team has been able to recover some of the lost production through a good performance throughout the year, and I really look forward to seeing my underground project adding considerable value to Perseus as we ramp up to commercial production, positioning CMA underground as a long-term key value driver for Yaoure. For Edikan, we produced 41,940 ounces of gold at an all-in site cost of $1,959 per ounce. Head grade process was 0.79 grams a tonne, down from 0.84 grams a tonne in the previous quarter as a result of pit sequencing and mining in lower grade areas of the Nkosuo pit. Quarter-on-quarter, Edikan produced -- production costs increased by 17% to USD 1,155 per ounce. The increase was primarily attributable to higher mining costs driven by increased diesel prices and increased blasting volumes associated with higher volumes of fresh ore and increased rehandle costs. In addition, grade control drilling at Nkosuo was increased during the June quarter following weather-related delays in the previous quarter. The increased costs were compounded by lower production volumes, which negatively impact the fixed cost absorption. The weighted average all-in site cost increased to $1,959 per ounce from $1,539 per ounce in the previous quarter attributable to the increased production costs, along with increase in royalties and timing of sustaining capital spend associated with the new cyanide tailings storage facility construction and perimeter dewatering wells. The royalties increased by $216 per ounce as a result of the new scaled royalty implemented by the government of Ghana that was effective from the 10th of March 2026. Gold sales from Edikan were 43,868 ounces at USD 4,347 per ounce. We also commenced the cutbacks in dewatering at the Fetish and Esuajah North pit, which are the future ore sources for Edikan once post completion of the Nkosuo pit. So Edikan produced a notional cash flow of $100 million for the quarter. Sissingue was a standout performer for the quarter, our Sissingue complex produced 28,161 ounces of gold at an all-in site cost of USD 1,550 per ounce, representing an 11% increase in production and a 3% reduction in all-in site costs compared to the previous quarter. This improved performance was mainly attributable to the higher proportion of high-grade ore from the Antoinette pit at Bagoe. Gold sales were 31,453 ounces at a realized gold price of $3,890 per ounce. Notional cash flow generated from the complex during the quarter was $66 million and taking into account the March quarter, the notional cash flow of $60 million. Sissingue has made a meaningful contribution to the performance of the business. Looking ahead to our FY '27 production and cost guidance. We expect production to be in the range of 420,000 to 480,000 ounces of gold at an all-in site cost of USD 1,835 to USD 2,070 per ounce. Our cost guidance is based on gold price assumption of $4,000 per ounce and government royalty rates of 8% in Cote d'Ivoire and 11% in Ghana. This guidance reflects the commencement of production at Nyanzaga, with our guidance, including 55,000 ounces of gold based on the FID as released in April 2025. All operating costs at Nyanzaga are capitalized into commercial production, which is planned for Q4 of FY '27. I'll hand over now to Lee-Anne, who will talk through the financial aspects of the quarter.

Thanks, Craig. The performance of our sites during this transitional year is not disappointed and allowed us to further strengthen our balance sheet. Our net cash and bullion position, as Craig pointed out, it ended the year at just over $1 billion. And this is after continued investment in our growth projects across the business. The liquidity position of the business sits at $1.4 billion with our undrawn debt facility of USD 400 million. And this liquidity excludes the USD 230 million of liquid investments in relation to our investments in predictive discovery and aurum. Giving consideration to the strong position of our balance sheet, we continued to purchase shares under the share buyback program announced in September '25. The AUD 100 million was reached in June '26, and the Board resolved to further increase the share buyback to AUD 115 million on the 15th of June 2026. At the end of June '26, we had purchased back 24.1 million shares at an average price of AUD 5.24 for a total cash outflow and a return of AUD 126.6 million. In FY '26, Perseus has returned AUD 194 million to shareholders via its interim dividend declared in February of $0.05 per share, totaling AUD 67.5 million. And the share buyback, as I just mentioned, of AUD 126.6 million. The shareholder returns has continued to grow since our maiden distribution in September '22, as you can see from the graphs. And further capital allocation will be under consideration by our Board as part of the financial statements released in August '26, in line with our capital management framework and dividend policy. The strong financial vision of Perseus has been built over years of strong sustainable cash flow generation through disciplined execution by our dedicated teams across the globe. As CFO of [ formal ] nearly 6 years as part of Perseus, I've had the privilege of sharing these results with everyone on these calls, but it's a team effort of every individual across the Perseus team that contributes to these outcomes. The strong gold price, coupled with a focus on cost and capital discipline, produced an average Q4 cash margin of $2,145 per ounce and delivered a notional cash flow for Q4 of USD 216 million. And as Craig pointed out earlier on, this has delivered a record full year notional cash flow of USD 769 million for the financial year, and that's a milestone for Perseus. We shift our focus now to the cash flows and capital allocation for the June '26 quarter specifically. The increase in cash and bullion to $1 billion was after operational cash flows of USD 276 million, continued capital investment in our growth projects in the quarter of about $142 million, with $108 million spent in progressing the Nyanzaga growth project, which Craig will speak to later, a further $26 million in progress in the development of the CMA underground. The start of the Edikan cutbacks, ongoing exploration drilling at our assets of $8 million with exploration now a key focus going forward on our capital allocation program. Continued contributions to our host countries of $77 million paid in corporate and other income and other taxes. Noting that we received the proceeds from the sale of the Sudan project in this quarter of USD 260 million. And we continue to return to our shareholders with AUD 77 million executed on the share buyback in the June quarter. I'll pause very quickly on this, and this is just a reconciliation of our all-in site cost cash-based metric to the all-in sustaining cost metric, showing that the all-in site cost of $1,941 reconciles down to $1,845 -- sorry, $1,848 on the all-in sustaining caustic metric. I'll now hand back to Craig to take everyone through the update on the Nyanzaga gold project.

Thanks, Lee-Anne, and some pretty impressive numbers there. Moving on to our organic growth projects and starting with Nyanzaga. So the Nyanzaga Gold project remains on budget and schedule for first gold in January 2027. The overall project progress achieved was 67% at the end of the quarter, and total costs incurred and committed to date are $424 million being 81% of the budget of $523 million. The Nyanzaga Gold project achieved a major safety milestone during the quarter, recording more than 8 million worked hours and 532 days of lost time injury-free time demonstrated Perseus' uncompromising commitment to safe project delivery. The key work fronts achieved significant progress over the period. So we've got all major procurement for the process plant is completed with equipment and material deliveries now at the peak. All-site installation contracts have been awarded and mobilized, the tailing storage facility construction is ahead of schedule with the North and South-East embankment is complete, and the South-West embankment is more than 60% complete, and the basin is being prepared for liner installation. The resettlement action plan was successfully completed with the handover of the final community infrastructure, including 2 schools, a dispensary, a granary on the Village office in the church. The pre-strip of the mining resource continued at Tusker Hill with 1.8 million BCMs moved to date. So Nyanzaga continues to build momentum as we move into the final phase of construction, and I look forward to providing more updates on its construction as it nears completion. Just a couple of photos there. Moving on to sustainability. So Perseus maintained a stable sustainability performance throughout the June quarter and finished as we said, FY '26 LTI free. Our total recordable injury frequency rate was 0.87 with 3 medical treatment injuries during the quarter, and all sites exceeded their leading safety indicator targets helping to stabilize that performance. Our contribution to our local economies was $388 million, including $226 million to local suppliers, $10.6 million in local wages and $126 million in taxes and royalties and $0.5 million in social investment. The local and national employment remained at 94% and our female participation increased slightly to 12.8%. In terms of the environment, our rehabilitation at assay progressed well. Our emissions intense reduced to 0.66 tonnes of CO2 equivalent per ounce produced and lower water drills at Edikan and Sissingue reduced our overall group water intensity. So overall, we achieved a disciplined and consistent sustainability performance to close out FY '26. So in closing, Perseus delivered another strong quarter of operational performance and strong financial returns and meaningful progress on our strategic growth projects. We strengthened our balance sheet -- with a strengthened balance sheet, high-margin operations and a clear pathway to growth through Nyanzaga and CMA underground, Perseus is exceptionally well positioned heading into FY '27. So thank you for joining us today, and I'll now open the floor to questions.

[Operator Instructions] Your first question comes from Reg Spencer at Canaccord.

Just a quick question on guidance and congrats on a very solid quarter, not much to really dive into. But I note that you provided some detail around what you expect to spend at Nyanzaga. But just group CapEx guidance for FY '27. Can we expect something with your full year results? Or can you give us some help on that front, please?

We haven't provided any specific CapEx guidance other than our capital projects, both the CMA underground and the Nyanzaga projects is really the key capital projects for us and obviously, our sustaining capital is included in our all-in site cost guidance.

Your next question comes from Richard Knights at Barrenjoey.

Just a quick 1 on Yaoure. You've had a couple of tough quarters there. I just wanted to get a feeling as to how the CMA underground is ramping up. What sort of proportion of the June quarter production was underground versus open pit? And in terms of the guidance for next year, what does that look like in terms of underground open pit and I suppose your level of confidence with how CMA is progressing?

Yes. Thanks, Richard. I think in terms of CMA, it's been a very, very good ramp-up for that project. And if you recall, at the start of the year, the approvals to start that project were delayed by about 3 months. So that set us back at the start of the year in terms of the CMA underground. We've been able to ramp that mine up quicker than what we initially had in our budget. So we've actually recovered some of that lost time throughout the course of the year. So that's been a pretty solid performance from the CMA underground. And it's a result of a couple of things. I think that the team at site are doing an exceptional job of building the first and operating the first underground mine in Cote d’Ivoire and the Ivorians are really taking to that well. But it's also a very good ground conditions. So it's meant for good development and good stoping performance. So we're pretty confident in the ongoing ramp-up. Obviously, we continue to ramp that up through the course of this financial year with a bigger second half than first half from the CMA underground. And so we're feeling pretty confident with its performance.

Yes. And can I just push you a little bit in terms of how you -- how much of the FY '27 guidance you think the CMA underground is going to contribute? Just trying to get a feel for how our model ramp-up and grades.

Yes. I mean we haven't provided any specific guidance on the proportion of underground versus open pit other than to say that we expect to be in commercial production sort of later this year -- this calendar year, but it's...

Yes. I think Rich, just the 1 thing that ultimately I want to remind is running -- we've mentioned this is that once it's running a commercial reduction, you get a 70% feed from the open pit and 30% feed from the underground through the mill, and that gives you a sort of a 50-50 outcome in terms of ounces out of the RF on the 2 resources.

But I think if you go back to the initial sort of FID release for the underground, that's a pretty good guide. Hopefully, we do better than that, but that's kind of the sort of we're tracking a little bit ahead of that now. But yes, that would be a good source of information in terms of how to think about the underground.

Yes. Okay. And just with the open pits at Yaoure, I mean, in terms of the sort of grade reconciliation issues and pit access, I mean, are you sort of confident in the mine plan for FY '27?

Yes, we are. So as you take the last quarter, it was actually quite a wet work season across Africa, both in Ghana and Cote d’Ivoire. So we did have some issues that kept us out of Stage 1 a little bit. So that was kind of part of the grade issue for the last quarter. And then the other thing we brought in some cyan oxide material, which -- it was only being mined during June, and that didn't perform the way we expected it to. So those are the 2 sort of mining challenges that we faced during the quarter, both short-term issues.

Your next question comes from Branko Skocic at JPMorgan.

Good to see Nyanzaga on track for Jan '27. I guess I was hoping you could step through I guess, critical path between now and then and just confirm if the mining contractor has been awarded? I might have missed that 1 in the release.

Yes. I think if you talk to critical path, it's really through the mills, all the infrastructure is progressing pretty much ahead of schedule, and it's really through getting the mills up and running and the commission, of course, into operation. So that's the key for the ongoing project. In terms of mining, we've moved as I said before, 1.8 million BCMs project to date, and so well on track for our ore delivery. We're using local contractors to do that work. In terms of the longer-term mining contract, we're still working through that, and we've got plenty of time to get that contract awarded.