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Perseus Mining Limited – Share Price Up 5%

Stuart Lucy

Stuart Lucy is an Investment Specialist at the Australian Stock Report, and has gained exposure to funds management and investment banking throughout his career. He draws on this experience to provide macroeconomic commentary and actionable investment insights to clients. Stuart is responsible for writing reports, is involved in delivering Macrovue webinars and provides general advice to our members on portfolio construction. Stuart currently holds RG146 General and Securities qualifications.

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.



This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)
(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).
This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law, we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.
ASR has no position in any of the stocks mentioned.
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