Perseus Mining Limited - Half Year Financial Results & 2012 Production Guidance


PERTH, Western Australia, Feb. 16, 2012 /CNW/ - Perseus Mining Limited ("Perseus" or the "Company") (TSX & ASX: PRU) is pleased to announce a net profit after tax of $13.68 million or 3.12 cents per share for the six months ended 31 December 2011 (the "period"). The result has particular significance in that it represents Perseus's final period of reporting as a pure exploration/development company. Future financial results by Perseus will include the revenue and operating costs associated with the Edikan Gold Mine.


The profit reported for the first half of FY2012 continued to reflect past accounting practice of capitalising operating costs during commissioning of the Edikan mine and revenue from gold sales. As a result the reported profit and balance sheet both reflect the benefits received during the period from a number of one-off items or contributions which include:

  • Income tax benefit of $8.865 million;

  • Foreign exchange gains of $9.953 million;

  • Equity raised via placement totalling a net $87.353 million and

  • Cash, cash equivalents and bullion on hand totalling $136.572 million

Gold production for the calendar year 2012 is forecast to be in the range of 220,000 to 240,000 ounces at an estimated average C1 cash cost of US $650 per oz.

Perseus Managing Director, Mark Calderwood's Comments

"While it's pleasing to be able to report a net profit for the first half of FY2012, we do note that the profit earned in the reporting period doesn't include the revenue or the operating costs associated with the Edikan Gold Mine that were capitalised during that period.

During the six months to 31 December 2011, the Edikan Gold Mine achieved our planned operational targets and as a consequence we were able to declare "commercial production" with effect from 1 January 2012. This means that future announcements of financial results by Perseus will include disclosure of not only production statistics but also relevant information on costs and earnings from Edikan.

In terms of guidance, after the expected ramp up of production at Edikan in the first half of CY2012 we expect to be producing gold on target during the second half of CY2012.   Second half gold production rates should be in the order of 135,000 to 145,000 ounces at an average cost of US$550 per ounce which compares favourably with our industry peer group."

Operational Overview

The primary focus of activities during the six months to 31 December 2011 was completing construction of the plant and initiating production at the Edikan Gold Mine.  The production ramp-up period for the Edikan Gold Mine has been longer than anticipated as a result of a number of "teething" problems encountered during the commissioning period, including:

a) Water pumping limitations and related issues;
b) Fine tuning of equipment settings, procedures and maintenance programs; and
c) Training and management of the locally recruited and relatively inexperienced workforce.

During the commissioning phase excellent mechanical and metallurgical performance was achieved demonstrating that the plant is physically capable of achieving at, or above, the performance levels set in the 2011 Life of Mine Plan ("LOMP") released in May. The Company chose, however, to take a more conservative view on forecast mill utilisation and the time required to de-bottle neck the plant to achieve the targeted throughput of 8 Mtpa.

The mining schedule was changed to delay mining of the higher grade AF-Gap ore with the result that lower grade ore was processed during the period under review, leaving the higher grade ore for processing in the second half of FY2012.

Production Forecast for CY2012

After 19 weeks of commissioning of the Edikan Gold Mine, Perseus's management formed the view that the operation was performing substantially as management intended, and effective from 1 January 2012 the Company declared that commissioning was complete and "Commercial Production" status had been achieved. As a consequence, the Company ceased capitalising expenditure associated with the Edikan Gold Mine on 31 December 2011.

Consequently, Perseus is now in a position to provide guidance as to likely production performance at the Edikan Gold Mine during the balance of Calendar Year 2012. The Company's estimates are as follows:

  Jul - Dec
Mar Qtr
Jun Qtr
Year 2012
Jul - Dec
Year 2012
Recovered Gold  (Ozs)          
  Lower Limit 45,8321 35,000 50,000 130,832 135,000 220,000
  Upper Limit 45,8321 40,000 55,000 140,832 145,000 240,000
C12 Cash Cos (US$/oz)          
  Estimate n/a 950 690 800 550 650
  1. Actual production
  2. C1 Cash Costs represent the direct cash cost at each processing stage from mining through to refining, less net by-product credits.

The relatively high estimated cash costs for the first half of 2012 compared to the second half 2012 is due in part to lower forecast levels of gold production in the first half of the year.  The overall C1 cash cost increase over the last 18 months is attributable to industry inflation for key inputs of energy (oil and electricity), human resources and consumables (cyanide and grinding media).   That said, the Edikan Gold Mine is a low unit cost producer due to relatively low levels of cyanide and electricity consumption, low waste to ore strip ratios and low G&A costs per tonne of ore milled.

Analysis of Financial Results

6 months ended 31 December

Other income   10,965,362 1,636,070
Professional fees   (766,370) (731,800)
Employee benefits expense   (3,287,760) (5,733,639)
Depreciation and amortisation expense   (126,925) (117,138)
Impairment reversal of  investment in associate   - 3,118,384
Share of net losses of associate   (256,460) (243,164)
Loss on disposal of investment   - (932,840)
Loss on derivative financial instruments   (136,866) (23,655,365)
Other expenses   (1,570,364) (15,766,236)
Profit / (Loss) before income tax expense   4,820,617 (42,425,728)
Income tax benefit / (expense)   8,865,124 -
Profit / (Loss) after tax benefit / (expense)   13,685,741 (42,425,728)

Profit Overview

The net profit after tax of $13.686 million, or 3.12 cents per share on a fully diluted basis represents a significant increase relative to the loss of $42.426 million recorded in the corresponding period in 2010, when a one-off hedge loss was recorded following the adoption of hedge accounting.

As "commercial production" was only declared on 1 January 2012, the profit does not include either the operating costs incurred or the revenue earned by the Edikan Gold Mine during the half-year.

During the period, the construction of the Edikan Gold Mine was completed, commissioning of the plant was substantially completed, and gold production commenced. Given these events, Directors considered it probable that the Group would earn sufficient taxable income to utilise previously unrecognised net deferred tax assets and therefore net tax assets of $21.863 million were recognised during the period, $8.865 million of which was brought to account as an income tax benefit in the Income Statement.

Significant downward movements in the AUD:USD exchange rate during the period gave rise to foreign exchange gains of $9.953 million as at 31 December 2011, which was included as revenue in the Income Statement.

General and Administration Costs

Administration costs for the period, comprising professional fees, employee benefit expenses and other expenses, totalled $5.624 million compared to the $22.232 million recorded in the previous corresponding period which included as one-off expenses foreign exchange losses of $8.794 million and the devaluation of put options of $5.488 million.

Balance Sheet

Perseus's net assets increased during the period by $99.217 million to $311.601 million.

Cash and cash equivalents increased by $34.993 million to $131.455 million. In addition, the Group held gold bullion valued at $5.117 million as at 31 December 2011.

During the period, the Group spent $17.081 million on exploration programmes in Ghana and Côte d'Ivoire aimed at increasing its inventory of Mineral Reserves and Resources.

Property Plant and Equipment reduced by $7.171 million during the period before depreciation charges and foreign exchange fluctuations were taken into account. This amount included a decrease in assets under construction of $8.901 million due to the net effect of capitalised gold sales revenue less operating and development costs and an increase in other property, plant and equipment of $1.730 million.

At 31 December 2011, Perseus had total borrowings amounting to $81.409 million drawn under a finance facility provided by Macquarie Bank Limited and Credit Suisse AG in June 2011.

The Group is also a party to cashflow designated gold forward sales contracts covering 230,000 ounces of gold which were entered into as a precondition to drawdown under the finance facility. As a consequence, the Group recognised a cash flow hedge liability of $74.996 million on the balance sheet as at 31 December 2011. Settlement of the forward sales contracts is scheduled between March 2012 and December 2014.

Cash Flow - Financing Activities

Net cash flows from financing activities totalled $87.353 million, including $89.121 million of gross proceeds that were received from a placement of 28.75 million ordinary shares at an issue price of Cdn$3.25 per share, plus a further $3.095 million received following the exercising of options issued under the Employee Share Option Plan. Offsetting these cash inflows were share issue expenses of $4.863 million.


The Group is currently embarked on a significant capital expenditure programme associated with the ramp- up of the Edikan Gold Mine in Ghana, the prospective development of the Sissingue Gold Mine in Côte d'Ivoire, and an active exploration programme aimed at expanding the Group's inventory of Mineral Reserves and Resources. Accordingly, Directors have determined that no dividend will be declared in respect of the half-year profit.

Mark Calderwood
Managing Director

About Perseus Mining Limited

Perseus Mining Limited (ASX/TSX: PRU) has forged a reputation as one of West Africa's most successful gold explorers focused on under-explored gold belts in West Africa.  Perseus recently became a producer at its Edikan Gold Mine in Ghana.   Details of the project and mine plan are set out in the technical report entitled "Technical Report - Central Ashanti Gold Project, Ghana" dated May 30, 2011.

Perseus is now also planning the development of its Sissingué Gold Project, part of the Tengrela Gold Project in Côte d'Ivoire, with production targeted for 2013. Tengrela has the potential to become a significant contributor to the Company's goal to develop into a 400,000 ounce per annum gold producer during 2013.  Details of the project are set out within "Technical Report - Tengrela Gold Project, Ivory Coast" dated December 22, 2010."

Perseus will continue its strategy of rapidly increasing its Mineral Resource and Reserve base during the ramp-up of the Edikan Gold Mine and development of the Sissingué Gold Project.

Caution Regarding Forward Looking Information: This news release contains forward-looking information which is based on the assumptions, estimates, analysis and opinions of management made in light of its experience and its perception of trends, current conditions and expected developments, as well as other factors that management of the Company believes to be relevant and reasonable in the circumstances at the date that such statements are made, but which may prove to be incorrect. Forward-looking statements include words or expressions such as "outlook", "guidance", "expected", "increasing", "augment", "potential", "objective", "will", "projected", "scheduled", "committed", "evolve", "become", "pursuing", "growth", "opportunities" and other similar words or expressions. Forward-looking information involves known and unknown risks, uncertainties, and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any anticipated future results, performance or achievements expressed or implied by such forward-looking information. Such factors include among other things: the price of gold, continuing commercial production at the Edikan Gold Mine without any major disruption, the accuracy of capital and operating cost estimates, the ability of the Company to operate in a safe, efficient and effective manner, the receipt of required governmental approvals and the ability of the Company to obtain financing as and when required and on reasonable terms.

Readers are cautioned that the foregoing list is not exhaustive of all risks, uncertainties, and assumptions which may have been used or considered by the Company. Although management believes that the assumptions made by the Company and the expectations represented by such information are reasonable, there can be no assurance that the forward-looking information will prove to be accurate. You can find further information with respect to risks in Perseus's 2011 Annual Report, 2011 Annual MD&A and 2011 Annual Information Form, as updated in Perseus's filings made with Canadian securities regulatory authorities and available at and releases to the Australian Stock Exchange and available at These documents are also available on our website at

Perseus does not undertake to update any forward-looking information, except in accordance with applicable securities laws. Readers should not place undue reliance on forward-looking information. 

SOURCE Perseus Mining Limited

For further information:

To discuss any aspect of this announcement, please contact:
Mark Calderwood at telephone +61 8 9240 6344 or email
Nathan Ryan at telephone +61 3 9622 2159 or email (media)
Rebecca Greco at telephone +1 416 822 6483 or email (Toronto)

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