JUNE 2022 QUARTER REPORT Perseus Mining delivers another strong performance FY2022 ASIC of US$952 per ounce
26 JULY 2022
NEWS RELEASE
JUNE 2022 QUARTER REPORT
Perseus Mining delivers another strong performance FY2022 ASIC of US$952 per ounce
PERTH, Western Australia/ July 26, 2022/Perseus Mining Limited (“Perseus” or the “Company”) (TSX & ASX: PRU)
reports on its activities for the three months’ period ended June 30, 2022 (the “Quarter”).
| DECEMBER 2021 | MARCH 2022 | JUNE 2022 | JUNE 2022 | 2022 FINANCIAL | ||
| PERFORMANCE INDICATOR | UNIT | |||||
| HALF YEAR | QUARTER | QUARTER | HALF YEAR | YEAR | ||
| Gold recovered Ounces | 241,164 | 130,523 | 122,327 | 252,850 | 494,014 | |
| Gold poured Ounces | 237,483 | 132,644 | 120,409 | 253,053 | 490,536 | |
| Production Cost US$/ounce | 839 | 789 | 881 | 834 | 836 | |
| All-In Site Cost (AISC) US$/ounce | 949 | 908 | 1,004 | 955 | 952 | |
| Gold sales Ounces | 238,135 | 131,044 | 111,897 | 242,941 | 481,075 | |
| Average sales price US$/ounce | 1,663 | 1,701 | 1,705 | 1,703 | 1,683 | |
| Notional Cashflow US$ million | 172 | 104 | 85 | 189 | 361 |
- Key Operating highlights include:
- Weighted average AISCs of US$952 per ounce for the financial year to 30 June 2022 (FY2022), in the bottom quartile of the market guidance range. AISC for the June 2022 half year and quarter of US$955 and US$1,004 per ounce respectively, both within market expectations.
- Annual gold production of 494,014 ounces was in upper half of market guidance range, notwithstanding a 19-day preventative maintenance shut at Edikan in the June 2022 quarter. Half Year production of 252,850 ounces included 122,327 ounces of gold produced during the June quarter.
- Average cash margin of US$731 per ounce of gold for FY2022, and US$748 and US$701 per ounce respectively for the half and quarterly year periods.
- Annual gold sales of 481,075 ounces at a weighted average sales price of US$1,683 per ounce including 111,897 ounces of gold sold during the quarter at US$1,705 per ounce.
- Notional cashflow from operations of US$361 million during FY2022 included June 2022 Half year and quarterly notional cashflows of US$189 million, and US$85 million respectively.
- The death of a Yaouré contractor’s employee following an accident on site late in the June quarter, overshadowed Perseus’s otherwise strong ESG performance and improvements made during the quarter.
- Perseus’s strong operating performance is forecast to continue with market guidance for the December 2022 Half Year of 240,000 to 265,000 ounces produced at an AISC of US$1,000 to US$1,100 per ounce.
- Business growth activities delivered excellent results, with a material increase in Perseus’s Ore Reserves inventory and mine lives at Edikan and potentially, Yaouré.
- Indicated Mineral Resources at Nkosuo near Edikan containing 422,000 ounces and Inferred Mineral Resources containing a further 27,000 ounces giving rise to Probable Ore Reserves totalling 10 million tonnes of ore grading 1.04g/t gold and containing 332,000 ounces of gold.
| PERSEUS MINING LIMITED | |
|---|---|
| Level 2, 437 Roberts Road, Subiaco WA 6008 | |
| ABN: 27 106 808 986 | 1 |
- The Prefeasibility Study for the CMA Underground Project progressed. Drilling was completed, resource modelling well advanced and preliminary mining, geotechnical and metallurgical study work completed. An updated Mineral Resource and Maiden Ore Reserve will be released during the September 2022 quarter.
- Perseus’s financial position continues to strengthen with available cash and bullion of US$328 million, debt of US$50 million, and net cash of US$278 million at 30 June 2022, US$50 million more than last quarter.
PERSEUSMINING.COM 2
OPERATIONS
QUARTERLY PRODUCTION, COSTS AND NOTIONAL CASHFLOW
Perseus’s three operating gold mines, Yaouré and Sissingué in Côte d’Ivoire, and Edikan in Ghana have combined to produce a total of 122,327 ounces of gold in the June 2022 quarter, bringing total annual gold production to 494,014 ounces for the first time.
The weighted average production cost of the Perseus group during the quarter was US$881 per ounce, while the weighted average AISC was US$1,004 per ounce of gold produced. On an annual basis, Perseus’s AISC of US$952 per ounce placed the Company near the middle of the global gold cost curve, as reported in JP Morgan’s June 2022 Gold Sector Review.
Table 1: Cost and Production Summary by Mine
| TOTAL GOLD PRODUCED (OUNCES) | ALL-IN SITE COST (US$/OUNCE) | |||||
|---|---|---|---|---|---|---|
| MINE | DECEMBER 2021 | MARCH 2022 | JUNE 2022 | DECEMBER 2021 | MARCH 2022 | JUNE 2022 |
| QUARTER | QUARTER | QUARTER | QUARTER | QUARTER | QUARTER | |
| Yaouré 75,189 76,921 | 81,150 | 700 662 | 641 | |||
| Edikan 35,124 38,590 | 28,668 | 1,450 1,336 | 1,859 | |||
| Sissingué 18,065 15,012 | 12,509 | 905 1,067 | 1,398 | |||
| Perseus Group | 128,378 | 130,523 | 122,327 | 934 | 908 | 1,004 |
Combined gold sales from all three operations totalled 111,897 ounces this quarter at a weighted average gold price realised of US$1,705 per ounce. For the full financial year, sales amounted to 481,075 ounces, at a weighted average realised gold price of US$1,683 per ounce. Perseus’s average cash margin for the June 2022 quarter was US$701 per ounce, or US$731 per ounce for the full financial year.
Notional operating cashflow from operations for the quarter was US$85 million, bringing the total amount of notional cashflow generated by Perseus during the financial year to 30 June 2022 to US$361 million, the majority of which was generated by our Yaouré Gold Mine.
Table 2: Realised Gold Price and Notional Cash Flow by Mine
| REALISED GOLD PRICE | NOTIONAL CASH FLOW FROM OPERATIONS | |||||
|---|---|---|---|---|---|---|
| (US$ PER OUNCE) | (US$ MILLION) | |||||
| MINE | ||||||
| DECEMBER 2021 | MARCH 2022 | JUNE 2022 | DECEMBER 2021 | MARCH 2022 | JUNE 2022 | |
| QUARTER | QUARTER | QUARTER | QUARTER | QUARTER | QUARTER | |
| Yaouré 1,699 1,720 | 1,673 | 75 81 | 84 | |||
| Edikan 1,613 1,673 | 1,802 | 6 13 | -2 | |||
| Sissingué 1,638 1,683 | 1,673 | 13 9 | 3 | |||
| Perseus Group | 1,669 | 1,701 | 1,705 | 94 | 104 | 85 |
Both of Perseus’s gold production and AISCs for the June 2022 half and full financial year as reported above, were strong relative to market guidance (refer to Table 3), confirming that Perseus’s plan to transform into a reliable, diversified mid-tier gold producer is on track.
Table 3: Cost and Production Relative to Market Guidance
| PERFORMANCE INDICATOR | HALF YEAR TO 30 JUNE 2022 | FULL 2022 FINANCIAL YEAR | ||
|---|---|---|---|---|
| GUIDANCE | ACTUAL | GUIDANCE | ACTUAL | |
| Gold Production (ounces) 230,00 to 265,000 | 252,820 | 471,164 to 506,164 | 494,014 | |
| AISC (US$ per ounce) 915 to 1,085 | 955 | 932 to 1,020 | 952 |
PERSEUSMINING.COM 3
YAOURÉ GOLD MINE, CÔTE D’IVOIRE
Yaouré has once again outperformed expectations this quarter, producing above the guided gold production range and below the bottom end of the market cost guidance range for both the June Half Year and the full financial year to 30 June 2022. In the process, Yaouré has produced approximately 66% of the Perseus Group’s quarterly gold production at an AISC that positions the mine towards the bottom end of the global gold cost curve referred to above. Taking the reasonably strong market for gold that has prevailed this financial year into account, in the 12 months to 30 June 2022, Yaouré has generated US$306 million of notional cashflow, US$41 million more than the development cost of the mine.
During the quarter, Yaouré increased its gold production by a further 6% compared to the prior quarter to 81,150 ounces of gold at a production cost of US$543 per ounce and an AISC of US$641 per ounce. The weighted average sales price of the 70,761 ounces of gold sold during the quarter was US$1,673 per ounce, giving rise to a cash margin of US$1,032 per ounce. Notional operating cashflow generated by Yaouré was US$84 million during the quarter, US$2.3 million more than in the March 2022 quarter.
The improving gold production at Yaouré reflected higher mill throughput rates (512 tph compared to 507 tph). Mill run time of 93% compared to 94% during the prior quarter, gold recovery rates (93.8% compared to 93.5%) and head grade of processed ore (2.60 g/t to 2.50 g/t) were all reasonably steady and in line with expectations.
The 3% reduction in quarter-on-quarter AISCs, largely reflected the increase in gold production. A slight decrease in royalties due to the timing of sales was offset by a US$5 per ounce increase in sustaining capital costs related to costs associated with the tailings’ storage facility and other site building works. On a unit cost basis, mining costs and G&A were reasonably steady although processing costs per tonne increased as a result of slightly more maintenance activities at the front end of the circuit. Refer to Table 4 below for details of key operating and financial parameters.
Table 4: Yaouré Quarterly Performance
| DECEMBER 2021 | MARCH 2022 | JUNE 2022 | JUNE 2022 | 2022 FINANCIAL | ||
| PARAMETER | UNIT | |||||
| HALF YEAR | QUARTER | QUARTER | HALF YEAR | YEAR | ||
| Gold Production & Sales |
| Total material mined | Tonnes | 16,210,761 | 9,295,689 | 8,881,028 | 18,176,717 | 34,387,478 |
| Total ore mined | Tonnes | 2,448,820 | 1,463,248 | 1,899,069 | 3,362,317 | 5,811,137 |
| Average ore grade | g/t gold | 2.02 | 1.93 | 1.88 | 1.90 | 1.95 |
| Strip ratio | t:t | 5.6 | 5.4 | 3.7 | 4.4 | 4.9 |
| Ore milled | Tonnes | 1,859,582 | 1,025,345 | 1,036,331 | 2,061,676 | 3,921,258 |
| Milled head grade | g/t gold | 2.51 | 2.5 | 2.6 | 2.55 | 2.53 |
| Gold recovery | % | 93.2 | 93.5 | 93.8 | 93.6 | 93.4 |
| Gold produced | ounces | 139,747 | 76,921 | 81,150 | 158,071 | 297,818 |
| Gold sales1 | ounces | 139,724 | 74,947 | 70,761 | 145,708 | 285,432 |
| Average sales price | US$/ounce | 1,695 | 1,720 | 1,673 | 1,697 | 1,696 |
Unit Production Costs
| Mining cost | US$/t mined | 2.71 | 2.66 | 2.74 | 2.70 | 2.70 |
| Processing cost | US$/t milled | 13.63 | 12.38 | 13.96 | 13.17 | 13.39 |
| G & A cost | US$M/month | 1.99 | 1.62 | 1.76 | 1.69 | 1.84 |
All-In Site Cost
| Production cost | US$/ounce | 581 | 549 | 543 | 546 | 562 |
| Royalties | US$/ounce | 87 | 86 | 67 | 76 | 81 |
| Sub-total | US$/ounce | 669 | 635 | 610 | 622 | 644 |
| Sustaining capital | US$/ounce | 18 | 26 | 31 | 29 | 24 |
| Total All-In Site Cost2 | US$/ounce | 687 | 662 | 641 | 651 | 668 |
Notional Cashflow from Operations
Cash Margin US$/ounce 1,008 1,058 1,032 1,046 1,028 Notional Cash Flow US$M 140.9 81.4 83.7 165.3 306.2
Notes:
1. Gold sales are recognised in Perseus’s accounts when gold is delivered to the customer from Perseus’s metal account
2. Included in the AISC for the quarter is US$2.98 million of costs relating to excess waste stripping. When reporting cost of sales, in line with accepted practice under IFRS, this cost will be capitalised and the costs amortised over the remainder of the relevant pit life.
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The reconciliation of processed ore tonnes, grade and contained gold relative to the Yaouré Mineral Resource block model are shown in Table 5. During the last quarter, 35% more ore tonnes at 12% lower grade for 19% more ounces have been produced compared to the Mineral Resource model. Over the last six months and project to-date, Yaouré continues to produce more metal than predicted by the Mineral Resource model. The performance of the Yaouré Mineral Resource model to date is considered satisfactory, however work will continue to optimise the grade and reduce dilution.
Table 5: Yaouré Block Model to Mill Reconciliation
| BLOCK MODEL TO MILL CORRELATION FACTOR | |||
|---|---|---|---|
| PARAMETER | |||
| 3 MONTHS | 6 MONTHS | 1 YEAR | |
| Tonnes of Ore | 1.35 | 1.32 1.24 | |
| Head Grade | 0.88 | 0.89 0.91 | |
| Contained Gold | 1.19 | 1.17 1.13 |
FATAL ACCIDENT AT YAOURÉ
On Friday 24 June 2022, an employee of our mining contractor at Yaouré, EPSA Group, was fatally injured following an accident while working in EPSA’s heavy vehicle workshop. Perseus undertook an investigation into the incident and has consulted with the relevant Ivorian regulatory authorities.
Following the accident, a thorough review of all health and safety critical risks and controls has been initiated for all activities undertaken by Perseus’s employees and contractors across our three operating sites. This review will be followed by an improvement program where needed. This work will be conducted throughout FY2023, first prioritising the most significant risks at each site. The cultural Safety Transformation Program that has been underway since February 2022 has also been re-focused to ensure that all employees and contractors understand their personal and a collective role in creating a safe workplace, including coaching managers and supervisors on how they can lead the way.
Both Perseus and EPSA are providing support to help the victim’s family following this tragic accident, as well as offering support to our entire team at Yaouré and our other operations as they come to terms with the tragic loss of a colleague.
SISSINGUÉ GOLD MINE, CÔTE D’IVOIRE
Since pouring first gold in January 2018, Sissingué has continued to comfortably perform in line with market production and cost guidance, generating solid cashflow for Perseus and consistently achieving the targets that were originally set for the mine.
During the quarter, 12,509 ounces of gold were produced at Sissingué at a production cost of US$1,227 per ounce and an AISC of US$1,398 per ounce, an increase relative to prior periods. The weighted average sales price of the 13,445 ounces of gold sold during the quarter was reasonably steady at US$1,673 per ounce, giving rise to a reduced cash margin of US$275 per ounce. Notional cashflow generated by the Sissingué operation totalled US$3.4 million, US$5.9 million less than in the prior quarter. Refer to Table 6 below for details of operating and financial parameters.
The 2,503-ounce decrease in quarterly gold production largely resulted from an 11% decrease in the quantity of ore processed. This was caused by a change in the composition of mill feed as more sedimentary ore was processed compared to prior periods, and a reduction in mill run time due to maintenance activities early in the quarter. The head grade of processed ore also decreased from 1.32g/t to 1.24g/t, due to the composition of the mill feed but gold recovery rates remained stable at 89.6%.
The 31% or US$331 per ounce increase in quarter-on-quarter AISCs, was primarily a function of the 28% increase in production costs, attributable to the 17% decrease in the number of ounces of gold produced during the quarter, as explained above, and an increase in consumable and maintenance costs. Royalties per ounce also increased due to the timing of gold sales (i.e. royalties from the prior quarter were paid this quarter), while sustaining capital costs also increased reflecting an increase in expenditure on expanding the capacity of the TSF and upgrading security infrastructure at the mine.
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Table 6: Sissingué Quarterly Performance
| DECEMBER 2021 | MARCH 2022 | JUNE 2022 | JUNE 2022 | 2022 FINANCIAL | ||
| PARAMETER | UNIT | |||||
| HALF YEAR | QUARTER | QUARTER | HALF YEAR | YEAR | ||
| Gold Production & Sales |
| Total material mined | Tonnes | 1,102,186 | 1,242,344 | 1,205,035 | 2,447,379 | 3,549,565 |
| Total ore mined | Tonnes | 348,975 | 228,130 | 325,609 | 553,739 | 902,714 |
| Average ore grade | g/t gold | 1.17 | 0.72 | 1.03 | 0.9 | 1.0 |
| Strip ratio | t:t | 2.2 | 4.5 | 2.7 | 3.4 | 2.9 |
| Ore milled | Tonnes | 675,372 | 395,131 | 350,919 | 746,050 | 1,421,422 |
| Milled head grade | g/t gold | 1.78 | 1.32 | 1.24 | 1.28 | 1.52 |
| Gold recovery | % | 88.5 | 89.8 | 89.6 | 89.7 | 89.0 |
| Gold produced | ounces | 34,132 | 15,012 | 12,509 | 27,521 | 61,653 |
| Gold sales1 | ounces | 34,870 | 16,264 | 13,445 | 29,709 | 64,579 |
| Average sales price | US$/ounce | 1,630 | 1,683 | 1,673 | 1,680 | 1,653 |
Unit Production Costs
| Mining cost | US$/t mined | 7.81 | 4.52 | 4.65 | 4.58 | 5.58 |
| Processing cost | US$/t milled | 18.01 | 14.09 | 18.10 | 15.97 | 16.94 |
| G & A cost | US$M/month | 1.22 | 1.07 | 1.13 | 1.10 | 1.16 |
All-In Site Cost1
| Production cost | US$/ounce | 823 | 958 | 1,227 | 1,080 | 938 | |
| Royalties | US$/ounce | 89 | 97 | 124 | 110 | 98 | |
| Sub-total | US$/ounce | 912 | 1,055 | 1,351 | 1,190 | 1,036 | |
| Sustaining capital | US$/ounce | 5 | 13 | 47 | 28 | 15 | |
| Total All-In Site Cost | US$/ounce | 917 | 1,067 | 1,398 | 1,218 | 1,051 |
Notional Cashflow from Operations1
Cash Margin US$/ounce 713 616 275 460 601 Notional Cash Flow US$M 24.3 9.3 3.4 12.6 37.0
Notes:
1. Gold sales are recognised in Perseus’s accounts when gold is delivered to the customer from Perseus’s metal account.
2. Included in the AISC for the quarter is US$0.45 million of costs relating to excess waste stripping. When reporting cost of sales, in line with accepted practice under IFRS, this cost will be capitalised and the costs amortised over the remainder of the relevant pit life.
MINERAL RESOURCE TO MILL RECONCILIATION
The reconciliation of processed ore tonnes, grade and contained ounces relative to the Sissingué Mineral Resource block model is in Table 7 below. During the last three months, grade control has predicted materially increased tonnes (25%) increased grade (4%) and ounces (29%) when compared to the Mineral Resource Estimate. Over the last six- and 12-month periods of operation, Sissingué has also produced more metal than predicted by the Mineral Resource model. Perseus regards the overall outperformance as an acceptable variance, and a significant amount of work has been invested to more closely align the Resource Model with the over-delivery of ore experienced in the grade control.
Table 7: Sissingué Block Model to Mill Reconciliation
| BLOCK MODEL TO MILL CORRELATION FACTOR | |||
|---|---|---|---|
| PARAMETER | |||
| 3 MONTHS | 6 MONTHS | 1 YEAR | |
| Tonnes of Ore | 1.25 | 1.32 1.18 | |
| Head Grade | 1.04 | 1.06 1.01 | |
| Contained Gold | 1.29 | 1.39 1.19 |
UPDATE ON THE LIFE OF MINE PLAN EXTENSION FOR THE SISSINGUÉ OPERATION
Work is ongoing to obtain an Exploitation Permit (EP) covering the Bagoé exploration permit area. Community consultation processes required as part of the environmental permitting process were completed, and the ESIA (Environment and Social Impact Assessment), a prerequisite to the granting of the EP was completed, lodged with authorities and validated by the government’s inter-departmental review. Evaluation of the EP application is currently in process.
A further review of compensation entitlements for farmers who will be impacted by the development of the Fimbiasso pit, has been undertaken and payments are pending.
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EDIKAN GOLD MINE, GHANA
In summary, and in contrast to Perseus’s other two gold mines, Edikan’s operating performance during the June 2022 quarter was disappointing, falling short of Perseus’s required standards. This was partially due to the availability of Edikan’s processing facility being reduced by 21% during the quarter while the 19-day preventative maintenance shutdown, foreshadowed in the March 2022 Quarter Report, was undertaken. It also resulted from a combination of inadequate management of previous maintenance activities on the CIL tanks that impacted gold recovery rates, and poor block model to mill reconciliation recorded while mining in the AG Pit cutback area was completed.
On a positive note, the maintenance shutdown was successfully completed and since Edikan’s processing operations recommenced in mid-June 2022, almost all processing KPIs have been achieved or exceeded, helping to partially reduce the deficit caused by the shutdown of operations, but more importantly, providing confidence that with appropriate management, forecasts for the FY2023 years are achievable.
During the quarter, a total of 28,668 ounces of gold were produced at Edikan (26% less than in the March quarter) at a production cost of US$1,685 per ounce and an AISC of US$1,859 per ounce, 39% higher than in the prior quarter. Gold sales of 27,691 ounces were 30% less than in the prior quarter, at a weighted average realised gold price of US$1,802 per ounce, US$129 per ounce more than in the prior quarter. This generated a cash margin of -US$56 per ounce, approximately $400 per ounce less than the prior quarter. Negative notional cashflow of US$1.7 million resulted which was US$14.6 million worse than in the prior period. Table 8 summarises the key operating and financial parameters.
While an allowance was built into the Edikan market production and cost guidance for the June half year and the full financial year to allow for events such as those referred to above, this allowance was insufficient and both production and AISCs for both periods fell short of guidance. For the June half year, Edikan produced 67,258 ounces of gold at an AISC of US$ 1,559 per ounce compared to market guidance of 75,000 to 90,000 ounces at US$1,210 to US$1,430 per ounce, while for the full financial year, 134,543 ounces of gold were produced at an AISC of US$1,534 per ounce compared to market guidance of 142,284 to 157,284 ounces at US$1,350 to US$1,465 per ounce.
Table 8: Edikan Quarterly Performance
| DECEMBER 2021 | MARCH 2022 | JUNE 2022 | JUNE 2022 | 2022 FINANCIAL | ||
| PARAMETER | UNIT | |||||
| HALF YEAR | QUARTER | QUARTER | HALF YEAR | YEAR | ||
| Gold Production & Sales |
| Total material mined | Tonnes | 15,413,395 | 6,829,223 | 6,577,009 | 13,406,232 | 28,819,627 |
| Total ore mined | Tonnes | 1,624,878 | 1,242,630 | 1,289,580 | 2,532,210 | 4,157,088 |
| Average ore grade | g/t gold | 0.91 | 1.03 | 1.08 | 1.06 | 1.00 |
| Strip ratio | t:t | 8.5 | 4.50 | 4.10 | 4.29 | 5.93 |
| Ore milled | Tonnes | 3,487,218 | 1,633,717 | 1,250,300 | 2,884,017 | 6,371,235 |
| Milled head grade | g/t gold | 0.73 | 0.86 | 0.86 | 0.86 | 0.78 |
| Gold recovery | % | 83.0 | 85.8 | 83.1 | 84.6 | 83.8 |
| Gold produced | ounces | 67,285 | 38,590 | 28,668 | 67,258 | 134,543 |
| Gold sales1 | ounces | 63,541 | 39,833 | 27,691 | 67,524 | 131,064 |
| Average sales price | US$/ounce | 1,608 | 1,673 | 1,802 | 1,726 | 1,669 |
Unit Production Costs
| Mining cost | US$/t mined | 3.41 | 3.82 | 4.17 | 3.99 | 3.68 |
| Processing cost | US$/t milled | 8.39 | 9.97 | 12.95 | 11.26 | 9.69 |
| G & A cost | US$M/month | 1.89 | 1.33 | 1.56 | 1.45 | 1.67 |
All-In Site Cost2
| Production cost | US$/ounce | 1,383 | 1,202 | 1,685 | 1,408 | 1,396 |
| Royalties | US$/ounce | 102 | 116 | 117 | 116 | 109 |
| Sub-total | US$/ounce | 1,485 | 1,318 | 1,802 | 1,524 | 1,505 |
| Sustaining capital | US$/ounce | 24 | 18 | 57 | 34 | 29 |
| Total All-In Site Cost2 | US$/ounce | 1,509 | 1,336 | 1,859 | 1,559 | 1,534 |
Notional Cashflow from Operations1
Cash Margin US$/ounce 98 337 -56 168 135 Notional Cash Flow US$M 6.6 13.0 -1.6 11.3 18.2
Notes:
1. Gold sales are recognised in Perseus’s accounts when gold is delivered to the customer from Perseus’s metal account.
2. Included in the AISC for the quarter is US$5.15 million of costs relating to excess waste stripping. When reporting cost of sales, in line with accepted practice under IFRS, this cost will be capitalised and the costs amortised over the remainder of the relevant pit life.
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The reconciliation of processed ore tonnes, grade and contained ounces relative to the Edikan Mineral Resource block model are shown in Table 9 below.
Table 9: Edikan Block Model to Mill Reconciliation
| BLOCK MODEL TO MILL CORRELATION FACTOR | |||
|---|---|---|---|
| PARAMETER | |||
| 3 MONTHS | 6 MONTHS | 1 YEAR | |
| 1.07 | |||
| 0.74 | |||
| 0.79 |
Block model to mill reconciliation improved during the last part of the quarter relative to the prior periods in FY22. Mining has moved below the existing Stage 2 cutback void in the AG Pit which is the principal source of ore. During the quarter, ongoing work to reduce mining dilution continued to deliver solid results. Geological mapping has been successfully integrated into the daily ore prediction modelling and reflects the improving performance at Edikan.
Based on reconciliation results achieved in Q4 and the completion of the drilling for the next 30m of mining in the AG pit, the reconciliation has reverted to expected performance for the AG pit.
GROUP GOLD PRODUCTION AND COST MARKET GUIDANCE
Production and cost guidance for the Perseus Group and each of its individual mines for the six months and calendar year ending 31 December 2022, is as set out below in Table 10 below.
Table 10: Production and Cost Guidance
| JUNE 2022 HALF YEAR | DECEMBER 2022 HALF YEAR | 2022 CALENDAR YEAR | ||
| PARAMETER | UNITS | |||
| (ACTUAL) | (FORECAST) | (FORECAST) | ||
| Yaouré Gold Mine | ||||
| Production Ounces 158,071 | 130,000 to 140,000 | 288,071 to 298,071 | ||
| All-in Site Cost USD per ounce 651 | 810 to 875 | 725 to 750 | ||
| Sissingué Gold Mine | ||||
| Production Ounces 27,521 | 20,000 to 25,000 | 47,521 to 52, 521 | ||
| All-in Site Cost USD per ounce 1,218 | 1,600 to 1,950 | 1,400 to 1,525 | ||
| Edikan Gold Mine | ||||
| Production Ounces 67,258 | 90,000 to 100,000 | 157,258 to 167,258 | ||
| All-in Site Cost USD per ounce 1,559 | 1,190 to 1,320 | 1,340 to 1,420 | ||
| PERSEUS GROUP | ||||
| Production Ounces 252,850 | 240,000 to 265,000 | 492,850 to 517,850 | ||
| All-in Site Cost USD per ounce 954 | 1,000 to 1,100 | 980 to 1,025 |
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SUSTAINABILITY
SUSTAINABILITY GOVERNANCE
During the quarter, Perseus continued to strengthen its sustainability governance as follows:
- Following an accident at Yaouré on 24 June 2022, that resulted in the death of an employee of one of Perseus’s contractors, Perseus has:
- Re-focussed Phase 2 of our global project to transform Perseus’s health and safety culture across the operations on ensuring that all employees and contractors understand their personal and collective role in creating a safe workplace, including coaching managers and supervisors on how they can lead the way. Phase 1 of the program was completed in May 2022 and Phase 2 of the program will commence at the sites in early August 2022.
- Initiated a deep review and improvement program of health and safety critical risks and controls across all activities of Perseus and our contractors across our three operating sites. This work will be conducted over FY2023, first prioritising the most significant risks at each site.
- To further advance our Task Force on Climate Related Financial Disclosures Report (with the updated report to be released in our FY2023 sustainability reporting), Perseus:
- Completed a study of the greenhouse gas emissions profile of our portfolio and identified potential pathways of further study for future emissions reduction.
- Conducted a physical impact of climate change study across our portfolio.
- Completed gap analysis of our Yaouré and Sissingué Tailings Storage Facilities against the Global Industry Standard on Tailings Management, with results to be reported in our FY2022 Sustainability Report.
- Created our social performance policy and standard and conducted external expert review of our social performance framework, with implementation to commence in FY23. We also commenced update of our Sissingué Community Development Plan.
- Completed the renewal of the Fimbiasso Environmental and Social Impact Statement (ESIA) with the Côte d’Ivoire government and commenced the land and crop compensation process. We also completed the Bagoé ESIA public consultation sessions and achieved validation of the ESIA.
- Reviewed our Human Rights Policy in line with best practice (to be published in FY23) and conducted a human rights risk assessment across our operations.
- Developed a draft Supplier Code of Conduct, summarising Perseus’s supplier standards in relation to anticorruption and bribery, legal compliance, business continuity, human and labour rights, health and safety, community engagement, security, biodiversity and air emissions. The Supplier Code of Conduct will be implemented throughout FY23.
- Commenced external assurance on our FY22 sustainability data. The scope included limited assurance over the same data as FY21 (safety data and our alignment with the World Gold Council Responsible Gold Mining Principles). The scope was also expanded for FY22 to include limited assurance over our World Gold Council Conflict Free Gold Statement and value of community investment. Pre-assurance has been initiated over our Scope 1, 2 and 3 greenhouse gas emissions, energy data and water balance, with limited assurance to be conducted over this data in FY23.
- Completed updates to our closure cost models and rehabilitation provisions for the end of FY22.
- Participated in round table industry and government initiatives to reduce the risk of artisanal and illegal mining in and around our operations.
SUSTAINABILITY PERFORMANCE
This quarter, Perseus continued its strong sustainability performance relative to objectives and targets, as shown below in Table 11 and summarised as follows:
- Safety: Despite the tragic incident at Yaouré, safety performance across the rest of the portfolio was strong, with Total Recordable Injury Frequency Rates (TRIFR) reducing from 1.45 at the end of the March quarter to 1.21 at the end of June 2022, lower than the FY22 target of 1.3. Lost Time Injury Frequency (LTIFR) across the Group reduced
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from 0.36 to 0.17. Sissingué achieved another safety milestone, celebrating 6 million hours without a Lost Time Incident. Additional focus on safety performance at Edikan led to significant improvement over the financial year (from TRIFR of 1.49 and LTIFR of 0.37 in FY21 to a TRIFR of 0.98 and LTIFR of 0.20 for FY22). TRIFR and LTIFR also improved across the Group year on year, from 1.76 and 0.45 respectively in FY21 to 1.21 and 0.17 in FY22.
- Social:
- Total economic contribution to Perseus’s host countries of Ghana and Côte d’Ivoire for the financial year of around US$495 million (around 61% of revenue), including approximately US$394 million paid to local suppliers representing 81% of procurement, US$33 million paid as salaries and wages to local employees, US$67 million in payments to government as taxes, royalties and other payments, and around US$3.6 million in social investment (includes accrual for Yaouré).
- Local and national employment has been maintained at 95% for the quarter, and across the Perseus Group, our gender diversity was stable with the proportion of female employees ~13%, reflecting the industry in which we are involved but more particularly, the cultural orientation of our host countries.
- Zero significant community events occurred.
- Environment:
- Emissions intensity per ounce of gold produced and water intensity remained steady for the quarter and by comparison to FY21. Total Scope 1 and 2 greenhouse gas emissions increased by 33% from FY21, reflecting the increase in Group gold production.
- Following interest from additional vendors and completion of the new Yaouré LOM plan, Perseus updated the evaluation of the potential use of solar power at the operation. Further detailed studies will be carried out once options to extend the life of Yaouré have been confirmed.
- Zero significant environmental or tailings dam integrity issues occurred during the period.
In achieving the above, the following sustainability challenges were encountered by Perseus during the quarter:
- Death of an employee of Yaouré’s mining contractor, EPSA Group, following an accident on 24 June 2022 while working in EPSA’s heavy vehicle workshop as reported above.
- Government administrative delays continue to prevent the establishment of the Yaouré Community Development Fund and commencement of related community projects. Perseus continues to work with Government to establish the fund as soon as possible, escalating the issue on several occasions. Community funding has been accrued each month since commencing commercial production, with approximately US$2.9M accrued to-date.
- Illegal mining activities on Perseus’s mining and exploration licence areas continues to present challenges for the Company in both Ghana and Côte d’Ivoire. The Company continues to work closely with relevant government authorities to manage these activities that have proven to negatively impact both the environmental and social fabric of local communities.
- Ongoing tensions with the communities around Yaouré and Sissingué regarding employment, business opportunities, and crop and land compensation.
- Security risks at Sissingué and satellite development areas (Fimbiasso and Bagoé) continue to be closely monitored due to ongoing political and social unrest which has given rise to terrorist activities in Mali which lies immediately to the north of the Sissingué mine. Increased security threats of banditry were also closely monitored around Yaouré.
- Perseus received a US$5,000 regulatory fine at Edikan in Ghana associated with a Lost Time Injury that occurred in February 2022.
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Table 11: Sustainability Performance
| PERFORMANCE | SUB-AREA | METRIC | UNIT | SEP 2021 QUARTER | DEC 2021 QUARTER | MAR 2022 QUARTER | FY2022 | |
| DRIVER | JUN 2022 QUARTER |
Governance Compliance Material legal non-compliance Number 0 0 0 111 1
Social Worker Health, Safety Workplace fatalities Number 0 0 0 1 1 and Wellbeing
| Total Recordable Injury Frequency (TRIF) | Total Recordable | Edikan - 1.89 | Edikan - 1.36 | Edikan - 1.38 | Edikan – 0.98 | Edikan – 0.98 | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Injuries per million | Sissingué - 0.50 | Sissingué - 0.00 | Sissingué - 0.00 | Sissingué - 0.00 | Sissingué - 0.00 | ||||||
| hours worked, rolling | Yaouré - 3.24 | Yaouré - 3.49 | Yaouré - 2.78 | Yaouré - 2.59 | Yaouré - 2.59 | ||||||
| 12 months | Exploration - 2.80 | Exploration - 2.01 | Exploration - 0.82 | Exploration - 0.66 | Exploration - 0.66 | ||||||
| Group - 1.85 | Group - 1.49 | Group - 1.45 | Group – 1.21 | Group – 1.21 | |||||||
| Lost Time Injury Frequency (LTIFR) | Lost Time Injuries | Edikan - 0.38 | Edikan - 0.39 | Edikan - 0.39 | Edikan - 0.20 | Edikan - 0.20 | |||||
| (LTIFR) per million | Sissingué - 0.00 | Sissingué - 0.00 | Sissingué - 0.00 | Sissingué - 0.00 | Sissingué - 0.00 | ||||||
| hours worked, rolling | Yaouré - 0.991 | Yaouré - 0.76 | Yaouré - 0.35 | Yaouré - 0.00 | Yaouré - 0.00 | ||||||
| 12 months | Exploration - 1.40 | Exploration - 1.00 | Exploration - 0.82 | Exploration - 0.66 | Exploration - 0.66 | ||||||
| Group - 0.46 | Group - 0.46 | Group - 0.36 | Group - 0.17 | Group - 0.17 | |||||||
| COVID-19 Cases | Number | 66 | 60 | 17 | 0 | 143 | |||||
| Community Number of significant2community events | Number | 0 | 0 | 0 | 0 | 0 | |||||
| Community investment | US$ | US$818,4591,4 | US$956,4784 | US$985,0914 | US$877,5464 | US$3,637,5744 | |||||
| Economic Benefit Proportion local and national employment | % of total employees | 95% | 96% | 96% | 95% | 96% | |||||
| Proportion local and national procurement | % of total procurement | 74% | 81%1 | 86% | 84% | 81% | |||||
| Gender Diversity Board gender diversity | % | 33% | 33% | 33% | 33% | 33% | |||||
| Executive gender diversity | % | 40% | 40% | 40% | 40% | 40% | |||||
| Proportion of women employees | % | 13.8%3 | 12.0%3 | 13.1%3 | 14.0%3 | 13.0%3 | |||||
| Responsible Environment Number of significant2environmental events | Number | 0 | 0 | 0 | 0 | 0 |
Operations
Tailings Number of significant2 tailings dam integrity Number 0 0 0 0 0 failures Water stewardship Water used per ounce of gold produced M3/oz 6.91 8.05 7.85 7.87 7.87
Greenhouse Gas Scope 1 and 2 Greenhouse Gas Emissions per Tonnes of CO2-e/oz 0.57 0.57 0.53 0.55 0.55 Emissions ounce of gold produced Notes: 1. Corrected/re-stated figure from the September and December 2021 Quarter report
2. A significant event is one with an actual severity rating of four and above, based on Perseus's internal severity rating scale (tired from one to five by increasing severity) as defined in our Risk Management Framework
3. Permanent employees only.
4. Includes accruals for the CDLM at Yaouré.
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BUSINESS GROWTH
PROJECT DEVELOPMENT
During the quarter, the proposed Plan of Arrangement between Perseus and Orca Gold Inc. under which Perseus would acquire all the outstanding common shares of Orca not already owned by Perseus, was approved by Orca’s shareholders in a general meeting and subsequently approved by the Canadian court.
Following completion of the acquisition, Perseus became the owner of a:
- 70% interest in the Block 14 Gold Project in Sudan; and a
- 31.4% interest in Montage Gold Corp., the holder of tenements hosting the Kone Project in Cote d’Ivoire.
BLOCK 14 GOLD PROJECT
During the quarter, Perseus engaged in activities directed at advancing the Project towards a possible development decision in relation to the Block 14 Gold Project located in the north of Sudan, approximately 75 kilometres south of the border with Egypt. These pre-development activities have included:
- Integration of members of Orca’s team who wished to remain involved in the project, into Perseus’s team and recruiting additional team members as required;
- Expanding critical relationships within Sudan including with the key government ministries and Sudanese businesses leaders who may be able to supply goods and services to the project when it enters the development and or operating phases;
- Calling for tenders from qualified drilling companies to undertake approximately 100,000 metres drilling program at Block 14 aimed at infill drilling the Gulat Sufur South (GSS) deposit as well as sterilising adjacent land currently targeted to site key pieces of mine infrastructure including the tailings dam and waste dumps;
- Preparing for the mobilisation of the preferred drilling contractor, specifically clearing the way for the importation of drilling rigs and associated equipment and consumables needed to support and manage the program and upgrading site accommodation and support infrastructure;
- Prepare for large scale pump testing of the Area 5 aquifer to test recharge rates.
Work on the planned drilling program is expected to commence late in the September 2022 quarter along with confirmatory work on the Area 5 aquifer and preliminary activities for the Front-End Engineering Design (FEED) Study.
MONTAGE GOLD CORP.
During the quarter, Montage announced that they had entered a transaction with Barrick Gold Corporation and Endeavour Mining plc, to acquire 100% of their Mankono-Sissédougou Joint Venture Project which consists of three properties contiguous to Montage’s Koné Gold Project in Côte d’Ivoire. Two of the joint venture’s properties are currently the subject of Exploration Licence applications being considered by the Ivorian government. Completion of the transaction is subject to these licences being granted. On completion, Montage will acquire 100% of the issued and outstanding shares of Mankono Exploration Limited which holds the Mankono licences, for total consideration of C$30 million including C$14.5 million in cash, 22.1 million common shares of Montage, and a 2% NSR royalty allocated 70% to Barrick and 30% to Endeavour.
To fund the acquisition and ongoing working capital, Montage entered an underwriting agreement with Stifel GMP on behalf of a syndicate of underwriters, pursuant to which the Underwriters have agreed to purchase, on a bought deal private placement basis, approximately 28.6 million Subscription Receipts priced at C$0.70 per Subscription Receipt, which will convert into common Montage shares for gross proceeds of approximately C$20.0 million.
Perseus elected not to participate in the financing and as a result, if the transaction is completed, Perseus’s interest in Montage will decrease from its current level of 31.4% to 21.1% of issued capital.
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