CA - Perseus Mining Ltd (PMNXF) Q4 2023 Earnings Call Transcript

2023-08-31 00:34:09 ET

Perseus Mining Ltd (PMNXF)

Q4 2023 Earnings Conference Call

August 30, 2023, 19:00 ET

Company Participants

Nathan Ryan - NWR Communications

Jeff Quartermaine - MD, CEO & Executive Director

Lee-Anne de Bruin - CFO

Conference Call Participants

Reg Spencer - Canaccord Genuity

Presentation

Nathan Ryan

Good morning, and welcome to the Perseus Mining Investor Webinar and Conference Call. [Operator Instructions].

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

Jeff Quartermaine

Thanks, Nathan, and welcome, everybody, to Perseus Mining's webinar to discuss our company's results for the financial year ending 30th of June. As Nathan said, I'm Jeff Quartermaine, the CEO; and I'm joined on this call by our CFO, Lee-Anne de Bruin, who will be presenting to you today.

Before I pass to Lee-Anne, let me just provide some context to the report and other statements that have been published today, and to which Lee-Anne will speak in just a moment. Now as you're aware, in late July, Perseus published its June '23 quarter results that documented our operating performance for the financial year.

And in summary, these results included production of 535,281 ounces at an all-in site cost of less than USD 1,000 an ounce. And gold price, average gold price of over USD 1,800, resulting in a cash margin of USD 844 an ounce, positioning the company extremely well for future growth.

Now shown in a graphical format, these slides are very -- these results are very impressive, displaying consistent gold production, stable operating costs and several years of strong gold price, all of which have been achieved in a challenging economic and geopolitical environment.

Now as per the graph and to some degree, our quarterly report, don't convey, is the full financial implications of this very strong operating performance. And nor does it comprehensively record the details of the very high standards of ESG behavior that we as a responsible corporation have exhibited throughout the year in delivering these results. The FY '23 annual report that has been published today addresses all of these matters in a significant level of detail.

Now since July, our team has been very busy compiling all of the relevant data and obtaining external validation of all this by PricewaterhouseCoopers as well as assembling it all into a logical and very readable manner into our first fully integrated annual report that combines our fiscal '23 financial report, our fiscal '23 sustainability report, and of course, our operating results.

Now one-stop shop, a little bit, but certainly a very impressive document that describes an outstanding set of results across the board, if I may say so myself. Now what I'd like to do is to pass to my colleague Lee-Anne to -- whose team, along with members of our sustainability team, were instrumental in pulling these reports together and she will -- to both the financial and sustainability results. Following Lee-Anne's presentation, I'll round things out by giving you some insights in what we believe the future holds for our company Perseus Mining, and then we'll open the floor to questions that may arise from the presentation.

So over to you, Lee-Anne.

Lee-Anne de Bruin

Thank you, Jeff. It gives me great pleasure to be able to present the Perseus' financial results for the financial year ended June '23. These financial results have been underpinned by the exceptional performance of our operational and support teams in our multiple jurisdictions.

One of our core values in teamwork, and alone, we says, alone we achieve a little, but working together, we achieved a lot, and with this team behind us that we can present strong performance across the key financial metrics.

Revenue was up at $1.4 billion, 27% up from the previous financial year. Our profit before tax, up 103% at $568.8 million. And profit after tax all $476.7 million, up 7%. Importantly, for us, operating cash flow was up 24% at $648.3 million. To support net tangible assets up to $1.7 billion, increasing 41%, largely due to the increased cash and cash equivalent balances. The strong financial performance has also put Perseus in a position to declare a final dividend for FY '23 of $0.0248 per share.

Looking at the growth in earnings in a little more detail. As I mentioned, revenue up at $1.4 billion with EBITDA up at 46% at $821 million, and this was achieved through higher average gold prices achieved of USD 1,803 per ounce compared to USD 1,683 in FY '22. And an 11.7% increase in gold sales, leveraging our increased production.

EBITDA was up proportionately higher than the 27% increase in revenues, and this is largely attributable to overall focus and containing costs despite ongoing inflationary pressures. And then, of course, the increased production at Edikan and a sustained strong performance from Yaoure operations. [Technical Difficulty] Sorry, I have a small technical issue created by me.

Gross profit from operations was -- we're focusing on our growth story. Gross profit from operations was up 72% at $603 million, with depreciation and amortization, relatively stable in line with FY '22 at $217 million. Profit after tax, as I mentioned, was up 70% to $477 million, and this included a $90 million increase in the tax expense, which was due to improved operational performance from Edikan, which resulted in a greater income tax contribution in Ghana this year and the profitability of the Ivorian operations, and hence paying withholding taxes on the payment of intercompany dividends Côte d’Ivoire to Australia.

The growth in our earnings per share on basic earnings per share of $0.3127 per share, up 67%. And then our earnings per ounce, a key focus for Perseus, $887 per ounce. Evidence on this graph on the right that Perseus is proud of its achievement to have consistently generated growth in earnings over the last financial -- 4 financial years.

Moving on to growth and cash flow. The operating cash flow was up 24% at $648 million, including, as I may previously mentioned, a $100 million increase in our income taxes paid. This generated operating cash flow per share of $0.4744 up nearly 13%. And operating cash flow per ounce of $1,206, up 11%.

The operational and financial performance over the last 12 months has allowed Perseus to further strengthen its balance sheet, positioning it well for future growth opportunities that may arise. The cash and bullion increased by $302 million that's 70%, after repaying down the last on our historic debt facility during the period.

We also took the opportunity to refinance our previous USD 150 million debt facility and upside to USD 300 million during the second half of FY '23. And this has positioned purses with approximately USD 800 million or $1.2 billion in existing reserves and under debt capacity to focus on the future. The net tangible assets of Perseus were up at $1.7 billion at the end of the 12 months.

That then brings me to the dividend declaration. In August 2021, Perseus announced its dividend policy, which aims toward shareholders while maintaining a balanced capital structure, and of course, capacity to fund corporate growth. The Perseus Board has today declared an FY '23 final dividend of $0.0248 per share totaling about $34 million.

This, including the HY '23 interim dividend equates to a 2% annual yield or $0.354 per share, a total of about $48 million in FY'23 dividends. This will bring the total return for Perseus to pay to our shareholders to nearly $100 million since declaring our maiden distribution in August 2021, 2 years ago.

As Jeff mentioned earlier on, you'll see that this year, we've combined our financial report, sustainability report, and annual report into one integrated annual report. And the integrated report illustrates that combined with the strong financial performance. Perseus has been able to increase investments in our host communities with a focus on delivering a lasting and positive impact for the broader stakeholder communities in which we operate.

In addition, we've always remains dedicated to the health and safety of all our employees and contractors with a particular focus on creating a strong safety culture.

Focusing on some of the key highlights in sustainability report, are we contributed approximately USD 537 million in economic contribution to our host countries as Ghana, Côte d’Ivoire and Sudan. Local national employment is at 95%, and local procurement makes up 79% of our procurement activities in our countries in which we operate, something of which we are extremely proud.

In FY '23, we were also proud that we've had zero significant environmental or community events recorded. We maintained a stable group rolling 12-month TRIFR at a rate of 1.3, which was below that of our peers.

In addition, we continue to obtain external independent limited assurance over selected Health and Safety data, community contribution data, and the Conflict-Free Gold Conformance. And this year, we took the step to extend our third-party assurance to cover greenhouse gas and energy data.

So that brings us some representation of our financial and sustainability performance to an end. And I'll hand back to our CEO, Jeff Quartermaine.

Jeff Quartermaine

Thanks very much, Lee-Anne, and for an excellent presentation. So in conclusion, as I said at the start of the call, Perseus has had a very good year on all fronts. And what Lee-Anne has just described is clear evidence of that.

Now looking forward, we expect to continue to perform at least in the manner that we have for the last few years that we're possibly, or possible rather, continuously improve so that we can deliver a similar set of results to those that we have been spoken about today.

Now in specific terms, over the -- from an operating perspective, at least over the next 6 months, we expect to continue very strong performance. And you can see from the slide that is on the screen there that Yaoure will continue to be the dominant producer of gold producing for the next 6 months between 125,000 and 140,000 ounces of gold at well under USD 1,000 an ounce.

Sissingue is in the declining years of the mine, and it's doing 27,500 to 32,500 ounces. It's got much higher costs due to the fact that we're expensing will development costs of a satellite mine around the at Bagoe. And Edikan is performing very, very strongly as well and continuing to deliver around 100,000 ounces to our total. So around 242,500 to 272,500 ounces. And I think that the all-in site costs around the USD 1,000 an ounce is fairly healthy.

Now we're able to achieve these targets, and I'm very confident that we will, using the performance of the first 2 months of the current half year as a guide, and we will like to continue to generate very substantial levels of cash that can be applied to continue, continuing to deliver benefits to all of our stakeholders in fair and equitable proportions as our corporate mission requires.

Now given that many of our listeners here today on this call come from the very important stakeholder group comprised of existing and prospective shareholders. I'll talk about what this group in particular can expect us to do with the considerable amounts of cash that are building within the company.

Now firstly, capital management. Now as we have announced today, we have continued to pay dividends in line with our policy, which has that we pay a base yield of 1% and depending on the discretion of the Board with a view to the future, and our cash generating, we also pay a bonus. So this year, on top of the basic 1% yield, we've increased the dividend to represent a 2% yield.

In terms of what that means in the overall context, as Lee-Anne said, about $100 million have been returned to our shareholder group in the last year or so, a couple of years, which is a fairly healthy position.

Now in terms of other capital management initiatives, we're considering that along the way, in fact, in reaching the position that we did on this occasion. We have very thoroughly evaluated our capital approach to capital management, and we're very comfortable with what we've done on this occasion with the dividend declaration given the growth aspirations that the company has going forward.

Now speaking of funding growth, we believe that, that's certainly a very important part of our mandate, given that it will lead to capital gains for shareholders if we do our job properly.

Now the fund -- the capital -- the growth will come from 2 sources, one from organic growth and other from potentially inorganic growth. Speaking of the organic growth, first of all, as part of our quarterly report, we flagged that we'll be coming out with an updated Life of Mine plan for the Yaoure mine in September. And that updated Life of Mine plan will include the development of our first ever underground mining operation based on the CMA pit.

Now we've been working on that exercise for some time and are very, very encouraged by the contribution that, that will make to the company going forward, both in terms of incremental ounce production and -- but also to adding to the considerably to the life of that operation.

It is interesting to note that since we took the decision to develop the Yaoure mine looking at the reserve that existed at that particular time compared to what it is -- what we've added to that reserve base. We've actually increased the reserve base by 82% as a result of very successful near-mine exploration activities.

Now that sort of activity that organic growth activity will also come from our Edikan mine where we're basically exploring it at the moment. And if we are able to convince ourselves that we can undergo mine -- from underground consistently well in the -- as far as South underground operations is also an opportunity for us to continue to develop and add to the fortunes of that particular mining operation.

In an inorganic sense, there's a lot of discussion around what we will do in that space. We have over the last 5 or 6 years been reasonably successful in our M&A activities, which included Amara that yielded the Yaoure mine, Exore, which delivered extensions to the Sissingue operation, and of course, the acquisition of Orca, which has given us a very, very large Meyas Sand project up in Sudan.

So I don't think there's much doubt that the company has the capacity to execute successful M&A when the opportunity arises and when we identify opportunities that will significantly add value to our business.

We are looking at lots of opportunities. I made an observation to my team the other day that our cash balance seems to be burning a hole in the pockets of outside observers far more than it is burning a hole in our pocket. We will make investments when we are convinced that we can create significant value for our shareholders and not before. But that is certainly a part of the plan going forward.

Now finally, it would be very, very remiss of me not to acknowledge the enormous contribution made to the success of Perseus over the last 12 months, and indeed over the last 10 years, by all of the men and women from multiple countries, ethnic and religious backgrounds that make up the Perseus team.

Now irrespective of where they sit in our organization, these people have done an outstanding job this year. In every sense of the word, our entire team has walked a talk by living our corporate values that include as Lee-Anne said teamwork, but also integrity, commitment, and finally, achievement.

I think that the reports that we have delivered today are clear proof of this, and I'd encourage you all to take the time to read the reports very carefully and learn with an outstanding company that Perseus has become.

So thanks very much for your attention today. This brings our presentation to a close. Lee-Anne and I are now available to take any questions that you may have. Thank you very much for your attention.

Question-and-Answer Session

A - Nathan Ryan

Thank you, Jeff. [Operator Instructions]. Your first question comes from Reg Spencer at Canaccord.

Reg Spencer

Thanks, Nathan. Good morning, Jeff, and Lee-Anne. Congratulations on the company's full year results. And it's great to see your final term together from a financial sense.

I've only got one question for now. And I was just looking through your balance sheet, noting carrying value of Meyas Sand. Is there any risk that, that may impair given that immediate development plans are being deferred for now? Is there any risk of that in next year's results?

Lee-Anne de Bruin

I mean, no, because obviously, we -- that's something that we require to look quite in detail as part of the audit. And so we went to really well in the process. And we believe until -- there's certain things that trigger an impairment and not of those have actually occurred. So unless something significantly changes between now and end of next year, there wouldn't be an impairment.

Nathan Ryan

There are no further questions at this time, Jeff. So I'll now hand back to you for closing remarks.

Jeff Quartermaine

Okay. Well, thanks very much, and thanks to all of the people who have joined us on the call today. I mean, I would be repeating myself to say what we've, very good results there. It's quite of a say out, and to say that we're extremely pleased to have been able to deliver them. It has been a bit of a journey, but the product is there to be seen.

Anyway, thank you very much, and look forward to continuing to deliver these sorts of results in many, many years to come, and to take our place as one of the more profitable gold companies listed on the Australian Stock Exchange and indeed throughout the world. Thank you very much.

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