CA - Perseus Mining Limited (PMNXF) H1 2023 Earnings Call Transcript

Perseus Mining Limited (PMNXF)

H1 2023 Earnings Conference Call

February 22, 2023 5:00 PM ET

Company Participants

Jeff Quartermaine – Managing Director and Chief Executive Officer

Lee-Anne de Bruin – Chief Financial Officer

Conference Call Participants

Presentation

Operator

Good morning and welcome to the Perseus Mining Investor Webinar and Conference Call. All attendees are in a listen-only mode. [Operator Instructions]

I'll now hand over to Perseus CEO and Managing Director, Jeff Quartermaine. Thank you, Jeff.

Jeff Quartermaine

Thank you, Nathan, and welcome to Perseus Mining's webinar to discuss our interim financial report for the six months ended 31st of December 2022. Now I'm joined on this call day 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 to the market yesterday. A little ahead of schedule, I must admit, but circumstances were such that we had little choice in that matter.

Now Lee-Anne will also be available later in the call as well I to answer any detailed questions that you have about our financial results or indeed our comprehensive financial report or any aspects of our business come to that.

Now before passing to Lee-Anne, let me just say that calendar 2022 has been an excellent year for Perseus. In January, we reported our operational results in our December quarter activities report. In this report, we advised that for the December half year, our gold production has exceeded market guidance and our all-in site costs have come in lower than the market guidance. Financial report that was released yesterday translates that excellent operating performance into equally excellent financial results.

And without further ado, I'll pass to Lee-Anne to give you an overview of the results that have been achieved before handing back to me for some closing remarks and then a Q&A opportunity.

Lee-Anne, please take it away.

Lee-Anne de Bruin

Thanks, Jeff, and it does give me great pleasure to present our financial results for the December 2022 half year. And obviously, we've got the normal cautionaries and then we'll move on to the first slide. Gold production of 268,000 ounces this six months was in line with our target production rate of 500,000 ounces per annum. The 268,000 ounces had exceeded the production guidance for the six months of 240,000 ounces to 265,000 ounces. The all-in site costs of US$930 per ounce was below the cost guidance range of six months to December of US$1,000 to US$1,100 per ounce.

Our focus on achieving high gold price resulted in a gold sold at $17.24 per ounce on average, which is largely in line with the average spot price for the six-month period. And this continued good performance of the operations is obviously positioning the group well for future growth.

Moving on to the fact that this all translated into strong performance across all financial metrics. Revenue was up to A$665 million, 22% on the previous comparative period. And this was attributable to sustained strong performance from our Yaouré and Sissingué operations, and a really strong improvement in performance from Edikan. It was also slightly helped by the 4% increase in overall price achieved of the $17.24 per ounce.

Profit after tax of A$203 million was up 60% on the comparative period, and was due to the increased revenues as well as our continued focus on maintaining costs in this inflationary environment.

Operating cash flow of A$300 million, up 22% on December 2021 and boosted by the strong operational performance at all three of our sites. Net tangible assets increased to A$1.4 billion, up 38% boosted by the increased cash and cash equivalents, which went from A$426 million to A$529 million. In addition, which we'll talk a little bit later, the Perseus forward improved an interim sustainable dividend. This then, solid increase in all our earning metrics translated into growth earnings.

Next slide, please. We delivered a – the revenue increase of 22% delivered a 40% increase in the EBITDA of A$355 million. Gross profit from operations increasing 62% to A$249 million, which included a 7% increase in depreciation and amortization on the comparative period. Profit before tax increase of 80% to $231 million. Income tax has increased during the year to $28 million, and this is largely due to the improved performance of our Edikan operation where and – where taxes are now being paid and dividends declared up on the Ivorian subsidiaries, which attract withholding tax.

Our profit after tax is up 60% to A$203 million, all of this delivering a basic earnings per share of $0.1324 per share, up 46% and an earnings per ounce, importantly, up $775 million – sorry, $775 per ounce, up 45%.

Moving on to Bagoé, we focus, which is on continued its growth in cash flow. This year, we delivered a 22% increase in the operating cash flow of $300 million, which equates to operating cash flow per share of $0.2195, up 9.5% on the December 2021 six-month period and an operating cash flow per ounce of A$1,117 per ounce, up 9.6% on the previous period.

Our growth in tangible assets in the six months to December 2022, cash and bullion position has increased 24% from A$476 million to A$594 million, or in U.S. dollar terms from $328 million to $405 million, which included the repayment of $50 million to bring the debt position down to nil. Currently, we also have $100 million of undrawn liquidity in this corporate loan facility. The current balance sheet is strong and has total assets of A$2.1 billion and net tangible assets of $1.4 billion, which equates to a net tangible assets of US$1.03 per share.

The trend of gold production remains attractive and as do our margins, and this slide sort of demonstrates the performance of Perseus and our operations over the last three – over the last couple of quarters. The 2022 calendar year was a record annual gold production for Perseus at 521,220 ounces, with our operational teams at all three sites delivering to plan. The all-in site cost, pleasingly, is 4% down year-on-year at US$940 per ounce with our continued focus on containing costs despite the current inflationary environment that we operate in. As I’ve mentioned, the average gold price was at US$17.14 per ounce, and this, in turn, delivered a cash margin of US$773 per ounce sold, culminating in notional cash flows of US$402 million for the calendar year.

Moving on to production and cost to market guidance for the June 2023 half year. Given consideration to the performance to date and for our forecast for the next six months, we’ve set our guidance for the next six months for the three operations, which, overall, is delivering production of between 498,000 to 528,000 ounces for the financial year ended June 2023. And an all-in site costs of between US$1,000 to US$1,100 per ounce for the financial year ended 2023 with Edikan and Yaouré offsetting the all-in site cost for Sissingué as it transitions to its satellite pit operations, namely ramping up Fimbiasso and commencing the Sissingué Stage 4 cutback.

Then moving on to dividend declarations. The Perseus Board in line with its dividend policy has declared a sustainable dividend of A$0.0106 per share, basically A$14.5 million, equating to a 1% annual yield based on the closing share price at the end of December 2022. In line with June 2022, at the end of June 2023 financial year, the Board will consider special dividends above the 1% annual yield, whilst balancing capital structure and its capacity to fund corporate growth.

That brings me to the end of the presentation, and I would like to pass on my thanks to our operational teams who have been the large contributor to this excellent performance. And I’ll hand over to Jeff, our CEO, to close off.

Jeff Quartermaine

Okay. Well, thanks very much, Lee-Anne. That was an excellent summary, I’m sure you’ll agree. Now before opening the floor to questions, I’d just like to make a couple of quick observations. The impressive financial results that have been reported along with the similarly high-quality operating results reported a few weeks ago, they don’t occur by themselves. And we do have excellent teams of people deployed it at all four of our operating sites in Africa and in offices in Abidjan, Accra, Khartoum, and Perth. They’re all staffed by people, who work tirelessly to deliver these results and to do so day in, day out. Now it is hard work, and it requires a lot of tenacity, effort and sacrifice on their parts and on the parts of their families who support them, I might add, to achieve these outcomes.

And I know that I speak for all of our shareholders and all members of the Board when I publicly acknowledge the contribution that all employees have made, and I extend my personal sincere thanks to everybody, and I know a lot of our employees do listen into these webinars.

Now to my way of thinking, it’s fairly clear that Perseus is in excellent shape as a company. It’s true that it hasn’t always been this way, but we have progressively transformed this company from being a junior explorer to a mid-tier gold producer, developer and explorer. That consistently turns out high-quality results, and we’re building a very, very solid platform from which to face the future.

Now in this regard, not only do we expect to continue performing operationally and financially at a high level, as indicated by the market guidance that Lee-Anne just mentioned, and certainly, the results that we’ve delivered for the first half of this quarter support this statement. But we also expect that opportunities will come our way to continue improving – continue prudently moving along the growth path. I say prudently because there is no shortage of ways to invest our hard-earned financial resources, but opportunities that create substantial value for shareholders and what we’re looking for, and these are a bit harder to find.

Now we do intend to continue searching for these opportunities, and when the stars do align, we will execute as we’ve successfully done in the past. So Perseus has a very bright future ahead of it, in my opinion. And those of you who are existing shareholders, well done in backing your judgment thus far and for those who aren’t yet shareholders, Perseus is a company that warrant serious consideration if you’re looking for a quality investment in gold.

So thank you very much for your attention today. This brings our presentation to a close. And now Lee-Anne and I are happy to take any questions that any of our listeners may have.

Question-and-Answer Session

A - Nathan Ryan

Jeff Quartermaine

Okay. Well, look, thanks for that. Hopefully, the fact that there are no questions is an indication that our reporting is very clear and with no ambiguity. But in any event, thanks very much for your attendance today. And as I’ve said, we do look forward to continuing bringing you very solid results from this company going forward. Thank you.

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