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 very much, Nathan, and welcome to Perseus Mining's webinar to discuss our annual report for the financial year ended 30 June 2026. I'm joined today on the call by our Chief Financial Officer, Lee-Anne de Bruin. Lee-Anne and her team have been working very hard to produce the large number of financial documents that have been released today. So a big thank you to her and the team members and the people across Australia and Africa that have helped pull these results together. And also I want to thank Mel Pollard, our Chief Sustainability Officer and her team for the work that they've done on preparing our inaugural climate report, which is part of our annual report and our sustainable development report, which was also released today. In just a moment, I'll ask Lee-Anne to take you through the details of the financial report. And -- but I'll share a few thoughts with you first, and then we'll conclude and go to questions and answers. So today, we've released a number of important announcements that continues to demonstrate the strength of our business and the commitments to our stakeholders. Firstly, with sustainability, our continued and relentless focus on safety of our people is reflected in our industry-leading safety performance. And this extends to our Nyanzaga project, which just passed 9 million work hours, lost-time injury free, which is a fantastic outcome. So those statistics aside, we're ever conscious that we must continue to improve our safety programs across the business to make sure that our people go home safely every day. Today, we released our first publication of our climate report under the new AASB S2 standard, which is an important step in how we continue to manage climate-related risks and further build resilience in our business. We delivered against our production cost guidance again this year and had a very strong year in financial performance with operating cash flow up 24% and earnings per share up 17%. Along with our financial results, we released our annual mineral resource and reserve update, which contains an increase of our mineral resources by 37% and our ore reserves up by 40%. We achieved first production at the CMA Underground, which commenced in April and the Nyanzaga Gold Project remains on track for first gold production in January 2027. This consistent performance, along with strong gold prices has enabled us to update our capital management framework, which was released today and this includes increased sustainable dividend and upsized buyback and a proposed special dividend to shareholders. Our final dividend was declared at $0.09 per share, bringing the full year dividend to $0.14 per share which, along with our buyback program, brings the total returns to shareholders for the year to $218 million. And Lee-Anne will talk to the details of what is a significant increase in shareholder returns shortly. Looking at our operational performance for the 2026 financial year. As reported last month, we produced 405,000 ounces of gold at an all-in site cost of $1,750 per ounce. The average realized gold price across the year was $3,693 per ounce, which was $1,150 per ounce more than last financial year. Our average cash margin for the year was $1,943 an ounce, which was $635 an ounce higher than the last year and a record notional cash flow of $769 million announced from our operations, which is $119 million higher than the financial year 2025. We closed the year with a net cash and bullion of just over $1 billion, up $270 million, and we remain debt free with $400 million of undrawn debt capacity available to us. So I'll hand over now to Lee-Anne and she'll take us through the financial results for FY '26.

Thanks, Craig, and good morning, everybody. Our financial results for FY '26 was the culmination of the effort of all our teams and contractors across the globe. To be able to sit here as CFO and speak to such strong results is a great measure, and it's not without the team effort of everyone that these are achieved. Turning to reflect on our key financial metrics. Revenue for the group was up 19% on financial year '25 at USD 1.5 billion. This was a result of higher gold prices, offset by a decrease in gold production arising at Yaouré and Edikan due to planned transition from ore sources at both those operations. Cost of sales were higher primarily driven by the higher royalty prices -- sorry, royalties, which was impacted by the higher gold prices. In addition, as previously reported to you, we had a 2% increase in royalty rates in Côte d'Ivoire ad the scaled royalty regime implemented by the government of Ghana, which was effective on the 10th of March '26. Further, the primary ore sources for Yaouré and Edikan transitioned during the year to the Yaouré open pit and Kossou open pit, respectively, both of which have higher concentrations of waste and lower overall grades, which increased the total cost to produce each ounce at the Edikan and Yaouré operations. Despite this increase in cost of sales, EBITDA was up 16% at USD 860 million. Overall, the group delivered a profit before tax of USD 716 million, up 27% on FY '25. Profit after tax was up 14%, with a year-on-year increase in taxes paid in our host countries due to increased profitability and in addition, Yaouré's tax holiday, which was a benefit we had for 5 years ended in December '25. There was a 24% decrease in depreciation amortization compared to last year, and this was due to the decrease in deferred stripping. The increase in profit after tax delivered at basic earnings per share of USD 0.3173 for the group, up 17% on FY '25 and delivering an earnings per ounce of USD 1,204, up 41%. Importantly, the group delivered a strong operating cash flow of USD 666 million, up 24% on FY '25 and this have allowed the Board to today declare a FY '26 final dividend of AUD 0.09 per share, up AUD 0.04 on the FY '25 final dividend. The Perseus culture of ensuring continued operational and financial performance has further strengthened our balance sheet, well positioning Perseus for growth. We ended the financial year with a net cash and bullion of over USD 1 billion, up $207 million on FY '25. This increase was on top of significant investment in our growth projects at Nyanzaga and the CMA Underground during the year. Total liquidity now sits at $1.4 billion using -- that's taking into account our $400 million of undrawn debt, which was refinanced in December '25. We will continue to hold our listed investments in Predictive and Aurum, which were valued at $233 million at 30 June '26. And one of our key focus as a team is our actual operating cash flow per ounce was up 54% at USD 1,070 per ounce. The financial strength and resilient balance sheet have allowed the board to declare record returns to shareholders in FY '26. This is being delivered via an increased dividend per share through the declaration of a final dividend of AUD 0.09 per share, totaling AUD 119 million. This takes the FY '26 dividend to $0.14 or a total of AUD 187 million, up 87% on FY '25. In addition, the Perseus Board has also approved to upscale the buyback to AUD 315 million -- sorry, AUD 350 million. This follows the completion of the buyback in FY '26, where we put away AUD 126 million as part of that buyback program. The Perseus Board is also considering an additional distribution of AUD $100 million out of the excess proceeds received from the recent sale of the Meyas Sand Gold Project in Sudan. This may include a further special dividend and/or return of capital. The split between the capital reduction and special dividend is still to be determined and will be confirmed through our consultations with the Australian Tax Office. Any capital reduction will be subject to any required shareholder approval, and the company will update shareholders on the proposed distribution together with the split between capital reduction and/or special dividend when finally determined. Taking into account the record returns to shareholders, it's important to reflect on the disciplined capital allocation of Perseus in FY '26. As mentioned, Perseus generated $666 million in operating cash flow in FY '26. To support the safe, sustainable operations and asset integrity, we invested nearly $30 million in sustaining capital across the group. A further USD 360 million was invested in our growth projects in Nyanzaga and CMA Underground with a further USD 41 million allocated to growth exploration. USD 129 million have been returned to shareholders through our dividend, which I have mentioned including the $0.09 final dividend declared and USD 89 million equivalent through the share buyback. Overall, we have returned USD 218 million to shareholders in FY '26. And this excludes the AUD 100 million proposed dividend I just spoke to. Beyond our shareholders, we continue to ensure we met our obligations to all our stakeholders who are critical to our social license to operate and our desire to make meaningful contributions in the countries in which we are fortunate to be working. We distributed $1.2 billion in economic contributions more broadly, which included local procurement, employee wages and benefits, taxes, royalties and community contributions. Having spoken now to our strong financial performance, resilient balance sheet and ongoing commitment to returning sustainable returns to shareholders, Perseus has enhanced its capital allocation framework going into FY '27. The framework sets out 5 key priorities. Firstly, as always, reliable operating cash flow underpinned by disciplined operational performance across our asset base and maintaining our commitment to our employees, our governments, communities, suppliers and lenders. Secondly, investing adequate sustaining capital to protect the integrity and safety of our existing operations, underpinning our reliable operating cash flow generation. Then balance sheet resilience. Perseus strives to maintain strong balance sheet capacity into the cycle to ensure we're able to position ourselves well for strategic growth opportunities. We have set a target of maintaining a minimum liquidity position of USD 500 million with the current liquidity sitting at just over $1.4 billion. Another key pillar is funding our growth. We want to continue to grow production at our existing sites, extend the life of our existing mines through resource and reserve growth and to position ourselves to execute capital investment, which delivers high yield returns. For FY '27, we are guiding around USD 530 million to be allocated to growth capital funding, the final stages of the Nyanzaga development as we go towards first gold pour, continued ramp-up of the CMA underground at Yaouré and the strategic cutbacks at Edikan. Between USD 70 million and USD 80 million is allocated to various exploration programs focused on extending mine life through brownfields and greenfields exploration. The final key pillar to our enhanced capital allocation framework is allocating capital to sustainable returns to our shareholders. The Board has approved a revised dividend policy, which commits to a sustainable dividend of a minimum of 20% of net cash flow from operating activities and this is after however dividends paid to our noncontrolling interest, which is our government shareholders. In addition, where the balance sheet has capacity beyond the growth objectives, the Board retains discretion to declare supplemental returns through additional dividends, buybacks or capital returns. Our framework looks to fund the business safely and sustainably first, keep the balance sheet resilient, invest in growth that extends mine life and return capital to shareholders in a way that is meaningful and yet sustainable to a longer-term growth strategy. Thanks very much for your time and listening today. It's been a year of change and addition at all our assets and all made possible by hard work and dedication of our Perseus team. I'll now hand back to Craig to discuss our other announcements today and an update on our Nyanzaga project.

Thank you, Lee-Anne. So as I mentioned earlier, we're also pleased to announce today our updated annual -- updated mineral resources and ore reserves as of 30 June 2026. Our group measured and indicated resources increased 37%, which is about 2.9 million ounces from our June '25 release to 10.6 million ounces, and our proved and profitable ore reserves increased 40%, which is 2 million ounces to 7 million ounces. So importantly, alongside the increases in Nyanzaga, which we announced in February, we have increased ore reserves at the Yaouré open pit. And at Edikan and Sissingué, we've successfully replaced mining depletion maintaining reserve life at both operations. Nyanzaga alone now accounts for around 4.1 million ounces of proved and probable reserves and 4.7 million ounces of measured and indicated resources which is a reminder of the scale of that asset as we continue to advance towards first gold in January 2027. Our mineral resources also increased significantly at both Yaouré and Edikan as we focus on life extension of those assets. And we've given guidance for our exploration spend this coming year, which doubles the exploration spend from last year targeting further growth at all our mines, including significant drill programs at Yaouré and Edikan, which aim to further increase mineral resources and to complete test work and studies to demonstrate the organic growth that exists within our current portfolio. Nyanzaga remains on budget and schedule for first gold in January 2027. There's significant activity at site with progress at the end of June at 67% with materials and equipment deliveries at its peak. And as it stands today, we have over 3,800 people on site delivering this project for us. We're continuing with our pre-stripping of the Kilimani and Tusker deposits with 1.2 million BCMs moved as of the end of June. We expect to move around over 7 million BCMs before first gold production, which is higher than the original plan of 4.6 million BCMs and as a result, we expect to spend an additional $20 million to $30 million on preproduction mining. So you'll see that in the way we've presented the cost numbers for Nyanzaga but to be clear, the capital development of the mine is within the original budgeted amount. Once Nyanzaga reaches commercial production, it adds a fourth cash-generating asset to our diversified portfolio significantly expanding group production and cash-generating capacity. So we're looking forward to bringing the project to conclusion and into operations. To that end, the operations team at Nyanzaga are well established and preparing to transition from a development project into a stable operation. Turning to our FY '27 group guidance. Production and cost guidance is unchanged from what we've previously told to market. We're guiding to 420,000 to 480,000 ounces at an all-in site cost of $1,835 per ounce to $2,070 per ounce. This guidance is based on a $4,000 gold price, which sets government royalty rates of 8% in Côte d'Ivoire and 11% in Ghana at that gold price. And at this stage, the cost guidance covers our 3 operating mines only, excluding Nyanzaga, which we'll update once commercial production is reached. We've also, for the first time, included sustaining capital and exploration cost guidance to enhance the information that we provide, and these are detailed in the appendix of this presentation. I spoke earlier of our safety performance. And whilst we have exceptional statistics, we are constantly aware that we need to work every day to make sure that our people go home safely each day. We continue to build our economic value to our host communities and countries. We distributed $1.2 billion in economic value this year, including $714 million in local procurement and close to $385 million in government payments. We also contributed over $5 million directly to community initiatives and livelihood development programs. The improvements of community roads, health and education infrastructure around the Nyanzaga Gold project also reflects our commitment to establishing ourselves as a long-term partner in the country. And finally, this year, we published our first climate report, which I mentioned earlier under the new Australian accounting standards and this includes a climate risk and opportunity assessment incorporating climate scenario analysis to better understand the potential physical and transitional impacts of climate change on our business. Together, these results reflect on our priorities to our people and our communities and our long-term resilience. I'll close by why we believe Perseus represents a compelling investment proposition. We have a diversified African asset portfolio backed by a proven track record of delivering on development and operating execution capability, which we're demonstrating again right now through Nyanzaga as it moves through construction. We delivered clear leading return on capital employed, driven by our cost-focused culture and a genuine track record of growing our ore reserve inventory, both organically and through M&A. Our growth prospects are underpinned by $1.4 billion of liquidity, and above all, we've built a reputation on proven execution and doing what we say we're going to do. So putting this together, this is a company set for solid growth and stable returns to shareholders and a solid balance sheet and a track record of discipline to deliver it. So before we move to questions, just one more item, we welcome Tommy McKeith to our Board as Non-Executive Director in July 2026, and we're looking forward to his contribution. And we also welcome Wade Bickley to the organization as Chief Operating Officer. So again, we're excited to have Wade on board. So thank you all for your time this morning. And Lee-Anne and I are happy to take questions.

[Operator Instructions] Your first question comes from Levi Spry at UBS.

A couple of questions just around the guidance, please. So just in terms of the CapEx at Edikan, can you just talk us through -- and I haven't -- sorry, I haven't been through the reserve and resource statement yet, but just talk us through what that cutback buys us in terms of mine life.

Thanks, Levi. Yes. So I think initially, when we -- Edikan as a life of mine was ending in about financial year '28. What we've done through the optimization of the pits and through the ongoing drilling program and now the cutbacks that we're doing is Edikan will run out to 2031. So it's basically added on an additional 4 years to the life of mine on the current cutback and the current development capital included in the guidance.

Perfect. I'll go through that later. And then just a reminder on the royalty piece. So the scaled royalties at Ghana and the extra 2% at Côte d'Ivoire, can you just remind us how we should be thinking about them going forward, please?

Yes. So I mean, Côte d'Ivoire has got -- has increased its royalty above $2,000 an ounce to -- so I took it from a little bit below $2,000 at 6% and now above $2,000 at 8%. So that's how you should be thinking about it in the context of Côte d'Ivoire. And then the Ghana scaled royalty is slightly more complicated, but it starts at 5% and goes all the way up to 12%, I think, above $4,000 an ounce. So I can give you -- I can send you that scale. Yes. It's going up every $500 per ounce.

Perfect. And last one, just on Nyanzaga. So just understanding the piece around the capital bring forward. Is that how I should think about it? Maybe you could just...

Yes, that's exactly how you should think about it. It's not additional capital. It's just we're bringing mining forward.

Okay. And just in terms of physically what's happening on the ground, can you just give us a quick picture of how things are going as we work towards commissioning?

Yes. I think -- well, physically on the ground, I was there 2 weeks ago. There's a lot of activity, obviously, construction in the mill area. Getting that ready for production is well advanced around the infrastructure. The tailings dams progressing well. The line is going down now as we speak. The water line from the lake for water is nearly completed. The main power lines are well and truly underway with all the substations and those sorts of things. So it's just bulk construction at this point in time, deliveries to site are really at their peak, and it's just down to putting everything together. But it's an impressive facility and a lot of people working very hard to create a fantastic outcome for the business.

Yes. Great. Maybe just one special one on the -- sorry, on the extra $100 million proceeds. When do you expect to get resolution on that from the ATO or just working out how [indiscernible]?

Yes. We're already in consultation with the ATO. But as you know, their process can take between 3 to 4 months. I mean ideally, we're hoping to have clarity before we send out all the AGM papers. So that's the intent. But I'm sort of governed by how long it takes the ATO. So it's in progress and so hopefully in the next couple of months and then hopefully before the next AGM.

Your next question comes from Richard Knights at Barrenjoey.

Just one on capital returns. Obviously, a big final dividend, but no news of continuing buyback. Just wondering how you're thinking about the sort of mix between dividends and buybacks going forward. Obviously, your dividends aren't going to be franked. But now with the new capital gains tax regime, potentially investors are getting penalized for capital gains as well. So I was just wondering how you're thinking about the sort of mix there going forward?

Yes. I mean, I think -- well, we obviously have announced the upsizing to the AUD 350 million and I think -- so in terms of our share buyback, we'll continue to consider that, but that's always going to be giving consideration to our growth agenda. But I think the Board and the management have sat down as I said over the next 12 months, we can have a look at AUD 350 million, and we'll just give a consideration to that each year in terms of what's available. And that will be, as you say, always balancing as much as we possibly can to be a tax effective for shareholders as we can within the constraints that are available.

Yes, sure, sure. Okay. And then maybe -- I mean, I know you get asked this pretty much every result. But just -- I mean, it's interesting that you've now got a minimum liquidity position that you're seeking to keep your sort of cash and available facilities above. Just wondering how you think about your maximum liquidity position?