Jeff Quartermaine,
Perseus Mining
"Over the last couple of years, Perseus has transformed from a single asset business into a multi-mine, multi-jurisdictional producer."

What have been the main developments at Perseus’s first project, Edikan gold mine in Ghana?

Edikan is an interesting operation involving challenging metallurgy and fairly low grades, which requires continuous attention in order to achieve our targets. Last year, we introduced a new mining strategy, going from two mining contractors to a single contractor and this has certainly helped us increase our cash margins. Hitting production targets is important but Perseus’s primary objective is focused on achieving cash targets. Earlier this year we announced a decision to proceed with a new underground operation at Edikan, which we plan to start developing in October 2020. Around Edikan, we also hold very interesting exploration opportunities which, if successful, will help us extend the current seven years mine-life. Although not a tier-one asset, Edikan has become a very good earner for Perseus.

Perseus recently announced the acquisition of Exore Resources as part of extended exploration at its high-grade, low-cost Sissingué gold mine in Ivory Coast. Could you comment on this milestone?

Exore Resources is a small exploration company with ground located about 70 km away from Sissingué mill; the acquisition puts Perseus in possession of 2,000 km2 of highly prospective land. We are very proud of our Sissingué mine. Our decision to build the mine was met with some criticism however, we developed the mine seeing the potential to bring on-line a very attractive, second income stream. Sissingué has since beaten all of our initial KPIs, doing much better than expected in terms of run time, throughput rates, recovery rates and grades. So far, we have not been able to expand the mine’s life as much as we wanted to, but we are pursuing several exploration targets. The acquisition of Exore provides us with the opportunity to continue to pursue this objective by discovering minable mineralization that can be processed through the Sisingué mill.

Yaouré is Perseus’s newest asset. Could you bring us up to date with the progress made so far in the construction of the mine?

The construction on our third project is on track, and is currently almost 75% complete, despite the challenges of the COVID-19 pandemic. Our stretch target is to pour the first gold by the end of this year. The original feasibility study is based on the mining of two open pits only, but while preparing the study we realized the main gold bearing structure continued at depth. We subsequently looked closely at this and designed a potential underground operation capable of accessing the deeper mineral resource.

Perseus launched its first Sustainability Report earlier this year. Could you give us an idea of Perseus’s ESG commitments?

For Perseus, ESG is not something new. For example, local procurement and local employment are particularly important to us. In our experience in Ghana, local contractors offer first-class services, and we rarely hire foreign contractors. We also believe that, in order to have a productive workforce, we need to ensure the local community is happy to host us. We contribute through offering business and education opportunities and we have also helped health authorities to cope with the current pandemic by providing them with equipment and facilities.

How do you think the gold price will consolidate in the future, and what impact will it take on M&A activity?

It is fairly easy to make a case for the gold price staying reasonably high, but we have been around for long enough to understand that the theory does not always apply. It is a cyclical game and gold prices will eventually come down. With acquisitions, shares are issued at a certain price, and if the economic fundamentals of the asset do not match the amount paid, then they will need to be written off the balance sheet. This is exactly what happened at the end of the last bull market when institutional investors became angry with the industry for having wasted a lot of money, even though it was the institutions themselves who encouraged consolidation. At Perseus, we are currently more focused on organic growth and on advancing our exploration targets to increase our resource base. Should the right inorganic growth opportunity present itself, however, we would not hesitate to make a purchase as long as it satisfies investment logic.

Do you have a final message?

Over the last couple of years, Perseus has transformed from a single asset business into a multi-mine, multi-jurisdictional producer. Perseus’s latest financial results are very healthy and, with the gold prices elevated, we look forward to another six months of strong financials. Next year, we will have three operating mines that will take us to the half a million oz/y production output by 2022, matched by very strong cashflows. The future for Perseus looks very positive indeed.