Top Gold Mines - The Perseus Mining Owned - Edikan Gold Mine, is an Emerging Gold Mine in West...

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COMPANY O V E R V I E W

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As one of West Africa’s emerging gold mines, Perseus has committed excellence to its shareholders and the surrounding community. Perseus Mining is a young and financially successful gold mine operating in Ghana and Côte d'Ivoire in Africa. Headquartered in Perth, Australia, the company is listed in both the Australian and Toronto Stock Exchanges. As the stabilising initiatives of the 2014 fiscal year come to an end, Perseus is looking towards a bright future of growth and possible expansion.

Transcript of Top Gold Mines - The Perseus Mining Owned - Edikan Gold Mine, is an Emerging Gold Mine in West...

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C O M P A N Y O V E R V I E W

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Perseus Mining:The Gold Standard in West AfricaAs one of West Africa’s emerging gold producers, Perseus has committed excellence to its shareholders and the surrounding communityWritten by: Laura Close Produced by: James Hayes

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Perseus Mining:The Gold Standard in West AfricaAs one of West Africa’s emerging gold producers, Perseus has committed excellence to its shareholders and the surrounding communityWritten by: Laura Close Produced by: James Hayes

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PERSEUS MINING

Perseus Mining is a young and financially successful gold producer operating in Ghana and Côte d’Ivoire in Africa.

Headquartered in Perth, Australia, the company is listed on both the Australian and Toronto stock exchanges. As the stabilising initiatives of the 2014 fiscal year come to an end, Perseus is looking towards a bright future of growth and potential expansion.

Production at Edikan Perseus first produced gold at Ghana’s Edikan Gold Mine (EGM) in August 2011, and the site achieved commercial production in January 2012. Edikan has 5.7 million ounces in measured and indicated gold resources, including 2.9 million ounces in reserve, and 2.4 million ounces

Perseus Mining corporate video

Operations at the Côte

d’Ivoire mine

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in inferred resources. For Fiscal 2014 (FY2014) Edikan will produce gold in the range of 130,000 to 193,000 ounces of gold.

EGM’s large reserve guarantees that mining and processing will last for at least a dozen years. Perseus has maintained production levels while the gold price is in a downward trend, and will look to increase production if the price improves, building on its already-strong revenue stream.

Sissingué Project developmentGold from Perseus’ Sissingué project in Côte d’Ivoire is a higher grade, but comes from a much smaller deposit than Edikan. Perseus is currently researching a less capital-intensive way to operate the Sissingué project; part of this plan includes looking into the metallurgy at the site

Edikan Mine Gold production

‘Gold from Perseus’ Sissingué project in Côte d’Ivoire is a higher grade, but comes from a much smaller deposit than Edikan’

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and materials in the area. The company is close to identifying a route that will deliver a far better outcome than originally envisaged, and a plan to move forward with this route will be applied near the end of this year.

GrowthContinuous improvement strategies at Perseus have two broad forms: formal and informal business improvement programs. The formal programs are for identifying the larger, more discernible concerns or ideas that would affect large parts of the business or the company as a whole. Employees from the ground up are encouraged to recommend any ideas for the informal business improvement programs; these are small-scale improvements that can be made to day-to-day work.

In Ghana, employees from all levels of the organisation have made many of the productive informal suggestions. If these informal programs require research or investigation, they are upgraded to formal programs.

Currently, Perseus is looking to make improvements to the processing side of the business, including mechanical changes to how it processes ore. These changes will be responsible for significant

AMS - African Mining ServicesEstablished in 1996, African Mining Services (AMS) is one of the largest contract mining companies in Africa. The company provides a complete range of surface contract mining services to resource companies across the region. Its roster includes full drilling and exploration, load and haul, drill and blast, and grade control.

In 2010 AMS secured a mining contract from Perseus Mining for work on the Central Ashanti gold project in Ghana. The contract, which is projected to generate $300 million in revenue over five years, is for complete service including grade control, drilling and blasting, loading and hauling ore and waste and crusher feed. The project commenced in October of 2010 and is expected to be completed by September 2015.

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Exploratory drilling core sample

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benefits in the form of increased throughput rates and improved recoveries. On the mining side, Perseus is looking into how it blast ore. The goal with this research is to improve how the ore breaks by a change in drill patterns, leading to a potentially easier mining process and better working conditions.

With the gold price cycle down, F2014 has been a stabilising year for Perseus. The company has reduced costs by introducing cost-effective alternatives and improving efficiency. Plans for F2015 (which starts in July) include expanding the Sissingue project and increasing production levels at Edikan.

Analysts’ outlooksEvans and Partners latest research report on Perseus shifted its rating from Neutral to Positive, as early production statistics for the March 2014 quarter showed promised and followed on from a strengthened performance in the December

Employee training

Performance improvement plan

1. Optimise Edikan Life of Mine Plan focussing on maximising cash margins and increasing NPV

2. Focus on process improvements at Edikan

3. Focus on reduction of costs across the company

4. Focus on efficiency of capital deployment

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2013 quarter. Analyst Cathy Moises put a target price of $1.13/share on Perseus, saying, “We see [Perseus] as a key recovery play in CY14 as plant problems appear largely resolved and the realisation of the revised mine plan at Edikan. Perseus is trading at less than half our current valuation; with a strong balance sheet and an eminently achievable business plan.”

In its latest Gold Sector Review, Credit Suisse increased its target price for Perseus to $0.65/share (from $0.64/sh) with an Outperform rating (previously Underperform).

Employee training and incentivesIntensive on-the-job training was an absolute necessity for Perseus coming into Africa. Fifty percent of the workforce is made up of locals from five different villages that surround the Edikan mine, and most had had no industry experience. Because of this, up to eight employees are solely involved in training the workforce.

Although building and training a workforce from scratch takes a lot of investment and time, it was worth it. Perseus has had the opportunity not only to build a close relationship with the community, but also has been able to train its workers from the beginning.

Perseus offers both short- and long-term incentive programs for its employees. The short-term programs are KPI (key performance indicator) based, and include extra funds for achieving or exceeding certain outcomes. A small

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The company’s gold

recovery production

performance began to

stabilise and improve

through 2012

‘In its latest Gold Sector Review, Credit Suisse increased its target price for Perseus to $0.65/share (from $0.64/sh) with an Outperform rating’

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Above: Pouring gold

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portion is allocated towards the full company, another percentage is allocated to the Ghanaian business, yet another to individual departments, and another to individual performance.

The long-term incentive program corresponds to company performance among a selection of its peers. If the total shareholders’ returns generated by the company are in the top 25 percent of a selected peer group of companies, then the rights to acquire shares at no cost are vested with that individual. This aligns with shareholders’ interests, so if Perseus is generating significantly better returns for its shareholders than other companies, the share prices are going to go up, and these rights will become more valuable.

Contributions to the surrounding communityPeople may think that the environmental standards in a developing country would not be as high as the rest of the world, but Perseus

Edikan Total

Rehabilitated to

Natural (76.85 Ha or

10.47% of the Total

Land Disturbed)

Edikan Total Land

Disturbed (733.77 Ha)

Edikan Total

Rehabilitated for

Erosion Control (32.95

Ha or 4.49% of the

Total Land Disturbed)

Perseus continually reclaims and re-vegetates the land

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PERSEUS MINING

The local community

‘It is one of Perseus’s biggest priorities to maintain good relationships with their community’

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has found the opposite to be true. The high environmental standards, although expensive and intensive to meet, are motivation for the company to better its social licence.

To make sure it leaves the site better than Perseus found it, the company continually reclaims and re-vegetates the land where it can. It supports a large nursery which grows trees and grasses from seedlings to maturity. Another important environmental initiative includes monitoring ground water.

As stated earlier, five surrounding villages supply around 50 percent of Perseus’s workforce. Some communities were relocated ahead of operations commencing at Edikan, with Perseus compensating those affected. Currently the company is building a subdivision that will include

‘CEO and Managing Director Jeff Quartermaine realises the community, mine and company are inextricably linked’

In the Edikan

community Perseus

runs several health and

education programs

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PERSEUS MINING

400 dwellings when completed. CEO and Managing Director Jeff Quartermaine

realises the community, mine and company are inextricably linked, and that Perseus’s presence and ability to operate in the area is only as good as the company’s social licence. Because of this, it is one of Perseus’s biggest priorities to maintain good relationships with its host community.

Perseus has been responsible for several health and education programs in the community. The company has donated material supplies to primary schools, and has financed close to 100 scholarships to technical college students in the nearby city of Kumasi. Perseus is also considering extending its programme of educational support

Edikan Mine

‘In the future, the company aims to become a multi-mine operator to provide multiple income streams and increase its stability in the region’

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to members of its host community by offering scholarships for university-level education.

Even though Perseus is a relatively young company, it is financially strong; the company has cash on board, no debt and a modest amount of hedging as a buffer against collapse in the price of gold. And while F2014 was about stabilising, F2015 will be about moving forward.

In the future, the company aims to become a multi-mine operator to provide multiple income streams and increase its stability in the region. Perseus has a successful group doing grass roots exploration, so the path for growth will most likely lead towards an organic option, rather than an acquisition.

Company Information

I N D U S T RY

Mining

H E A D Q U A RT E R S

Perth, Australia

F O U N D E D

2011

E M P L O Y E E S

750 (1,000 contractors)

R E V E N U E

$293m

P R O D U C T S /

S E R V I C E S

Gold

Central Ashanti Gold Project (CAGP)

Edikan Mine

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PERSEUS MINING Level 2, 437 Roberts Road, Subiaco,

Western Australia 6008

Tel. +61 8 6144 1700Fax. +61 8 6144 1799

[email protected] www.perseusmining.com