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Perseus Mining Limited (ASX: PRU) is a West African gold company. Perseus Mining operates two gold mines, Edikan in Ghana and Sissingue in Cote d’Ivoire. Perseus Mining is currently developing its third operation in Cote d’Ivoire, Yaoure. Perseus Mining has a market capitalisation of A$1.5 billion.
What are the key findings from Perseus Mining December quarterly activities report?
- Gold production for the December quarter at Edikan is 48,250 ounces at an All-in Site Cost (ASIC) of US$1,035.
- Gold production for the December quarter at Sissingue is 20,905 ounces at an ASIC of US$793.
- Total gold production for the December quarter is 69,155 ounces at an ASIC of US$962.
- Average sale price for the December quarter is US$1,415/oz.
What were the main drivers of this result?
Perseus Mining achieved a relatively flat quarterly result with a total increase in gold production of 2.8%, compared with the previous half year period.
Guidance for the June 2020 Half year remains unchanged. Refer to the graph below to see guidance:
What is the outlook for Perseus mining?
Perseus Mining is currently developing a new gold mine in Cote d’Ivoire, Yaoure. This mine is expected to produce 215,000 ounces per annum at an ASIC of US$734/oz over the first 5 years of production. This mine has been labeled to be an economically robust and a low-cost project. Development of the mine commenced in May 2019 and is estimated to achieve the target of first gold pour in December 2020. This low-cost mine could allow for Perseus Mining to develop into a mid-tier gold miner and allow for strong future cash flow.
The outlook for gold is not looking as favourable as it has been last year. This is in light of global economic conditions improving and new developments with certain countries that can improve economic certainly within the global economy. 5 days ago, the United States (US) and China signed phase one of a new trade deal between the countries. Additionally, there is increased certainty that the newly elected Prime Minister Boris Johnson will deliver Brexit. Boris Johnson’s plan is to leave the EU on 31 January 2020. After, this will begin the transition period that should consist of the UK negotiating new trade deals with other economies. If these deals are reached, global economic and political concerns may ease, causing gold to not be as favourable, as it has been between June 2019 – August 2019.
Although, there is one main global political uncertainly that remains. The United States (US) authorized a drone strike on Iran’s top military commander, Qasem Soleimani, which resulted in Qasem Soleimani’s death. This has significantly increased military tensions between the US and Iran in the middle east. Iran has responded by launching more than a dozen missiles at two Iraqi bases that holds US troops today (8 January 2020). It is becoming more likely that this military action by both countries may lead into a conflict between the US and Iran along with their allies.
What is the market reaction?
The market reaction to Perseus Mining quarterly activities report is positive. Perseus Mining is up around 5% and is currently trading at A$A1.13. Perseus Mining has a forward P/E ratio around the mid-hundreds.
