PRU - Perseus Mining

[flyboy77]

Why don't these guys list on TSX?

They did most of the grunt work for the procedural stuff last year?

Just costing we shareholders dollars....... anyone doubt that compare AND to PRU on a chart over the last 18 months.

AND is back to pre 'crash' highs, give or take; PRU still about half of the pre crash high!

 

[Sean K]

Why don't these guys list on TSX?

They did most of the grunt work for the procedural stuff last year?

Just costing we shareholders dollars....... anyone doubt that compare AND to PRU on a chart over the last 18 months.

AND is back to pre 'crash' highs, give or take; PRU still about half of the pre crash high!

Can't compare AND and PRU that much IMO. Different type of deposits, different regions, and the grades of AND are slightly better. Better comparing PRU to the other W African players.

 

[Sean K]

Makes you wonder if they weren't reading this thread doesn't it? :

I would say that M. Calderwood's mates and a few of those 'independent' Resource Modeller's may be having a few Friday arvo drinks today.

I suspect these revised numbers for Ayanfuri will be using the newly revised gold price of $850/oz, compared to the $750/oz (from memory?) price used for all the old pit shells. If this is correct, then a very large number of extra tons are suddenly going to be pulled into the pit shells, which is going to have a very, very substansial impact on the final revised Resource Statements - hence the Trading Halt I'm guessing.

jman

Yes, and we should have a drink too!

Lets hope it is as you say and it's a substantial increase, probably based on the revised POG assumptions. $850 sounds fine to me, although there are a few who have been calling a short term pull back into the 700s. Been doing that for a year or so though...

 

[Sean K]

Ann out after the close, and looks pretty good. Shame golds not running, this would give it quite a boost. May anyway, pending general market sentiment.

In pit resource more than doubled which seems significant. Perhaps they'll be able to produce more ounces per year from this baby?

I like their note on the ann reminding the market that their market cap per resource ounce is $16. For a company at this stage of the development cycle should be well over $20 really.

 

[flyboy77]

Can't compare AND and PRU that much IMO. Different type of deposits, different regions, and the grades of AND are slightly better. Better comparing PRU to the other W African players.

Not so Kennas, there is no reason at all why the two companies can't be compared.

The grades of AND are much better. In isolation, that means nothing...... PRU remains, at this stage, the better story imo.

 

[flyboy77]

Upgrade to In pit gold resources ~ 4m oz GOLD.

These are the highlights as lifted from the release:

In-pit gold resources increased to 4 million ounces, compared to 1.9 million in prefeasibility
• Total indicated and inferred resource currently 5.3 million ounces
• Fast-track DFS, based on Stage 1 in-pit resources of 2 million ounces
• Larger resource offers opportunity to expand operations at an early stage of production
• DFS and initial ore reserve statement expected in July 2009
• Major project status confirmed with long life potential of 10-15 years.

Some key points, quoting MC:

"The ultimate best fit is likely to be about 250,000ozpa to 300,000ozpa with throughput rates of up to 8Mtpa” (but only 4.5Mtpa initially)

As an exercise, in simple terms, 4.5Mtpa to 8mtpa is an increase of 78% in capacity......

[Add in Tengrela at 100,000 oz pa (and likely to be closer to 200,000 oz pa once additional resources are drilled out).]

Expecting a RESERVE of 3.5m oz by the time of production (mid 2011). Only TWO years away! Tengrela about 12 months behind Ayanfuri. "Very robust projects" (from the brr radio spiel)

Then from MC again:

"“Exploration, which has added resources at the rate of 2Mozpa for Perseus, is currently on hold but I am confident when it resumes it will easily replace ounces mined over an extended period”.

And remembering that to date in converting inferred resources to INDICATED the conversion factor has been GREATER than 100%!

Moreover at Ayanfuri, only 8 of the 19 pits/deposits that were mined historically have seen drill testing since PRU took control.

To save time and money and to fast track production, they are basing the DFS on the three major deposits at Ayanfuri only.....

Will be interesting to see how the market reacts tomorrow.

Please list on the TSX Mark- I guess they are waiting for a higher share price to minimise dilution?

Kennas, I consider a valuation many multiples of $20/oz is warranted?! (have a look at Grigor's report dated 16 March).

PRU remains the stand out ASX listed acquisition target in the gold sector imo.

 

[shag]

i may have missed something but grades mean everything, why mine and crush, leach and dump ten ton of rock, plus batter the sides, when u can get just as much gold from say 5 ton.
its a bit why ext is over three times the price of bmn.
as well as pdn is doing, it must be wishing it had ext's rock.

 

[flyboy77]

not so, PRU's average grade is pretty low at Ayanfuri but because of the free milling nature of the ore, the low strip ratios etc the costs are also low - both opex and capex.

High tonnages help the equation too of course!

Sure the higher grade the better, ceteris paribus, but that is not my point.

 

[Sean K]

i may have missed something but grades mean everything, why mine and crush, leach and dump ten ton of rock, plus batter the sides, when u can get just as much gold from say 5 ton.
its a bit why ext is over three times the price of bmn.
as well as pdn is doing, it must be wishing it had ext's rock.

Yes, shag, grades are extremely significant for any resource from Gold to Iron Ore. Obviously there's a number of other factors at play, but grade is one of the first things I look for in any resource. Your EXT/BMN example is a classic.

 

[jonojpsg]

Definitely looking the goods at the moment - sellers have dried up a treat, makes sense I guess when you have just doubled the in-pit resources and have such a huge differential between what they're worth and what they're valued at.

IMO we should see a significant run-on over the next week as this news percolates

 

[CapnBirdseye]

Now, if I said I was a little disappointed that I sold at 0.67 a few weeks ago, do you think I'd be telling the truth?

 

[jman2007]

Yes, and we should have a drink too!

Lets hope it is as you say and it's a substantial increase, probably based on the revised POG assumptions. $850 sounds fine to me, although there are a few who have been calling a short term pull back into the 700s. Been doing that for a year or so though...

It was a pretty good announcement really. There is a lot of information packed into a relatively small release, and the numerous tables need to be studied carefully too. There is another Warwick Grigor BGF broker report available on the PRU website which rates PRU a buy with a target price of $2.25. The report itself is pretty bland, and is more or less just a copy and paste job from the previous one, the charts look to be exactly the same. I wonder if this guy is being contracted to produce a certain number of these reports every 6 months?

http://perseusmining.com/aurora/assets/user_content/File/PerseusBGF20April09a.pdf

One point worth mentioning about Ayanfuri is the low-grade component (0.4-0.8 g/t). There are 1.261M oz grading @ 0.4-0.8g/t representing about 24% of the total Mineral Resource, or 60M t of low-grade feed. That's an absolutely enomous figure, and has a considerable diluting effect on the overall Ayanfuri grade, unless it is calculated separately -which is what PRU does. It would be interesting to know how PRU intend to mine and treat this material, presumably it is going to be stockpiled separately in the first few years of operation ie. low-grade stockpiles. I wonder how easy it will be to distinguish between low/high grade ore in the pit? It will come down to the continuity of the orebodies I guess.

It would be interesting to get a response from the company though.

jman

 

[flyboy77]

From Grigor's latest research report on the PRU web site (emphasis added by yours truly):

"Investment Perspective: Perseus (PRU) continues to stand out as one of the most significant emerging gold producers due to its resource base (approximately 7 mill oz.) from two projects in West Africa. It is not a company that will suffer from the hiatus in the share price due to lack of news flow in the financing and construction stage of the first project, Ayanfuri.

The less advanced Tengela gold project will continue to provide exploration updates from continuous drilling, with an expectation that the million ounces already announced will increase by at least 2-3 times. We expect continual good news flow, a rerating induced by Northern Hemisphere buying and increasing takeover speculation as the numbers firm up.

Perseus is trading at a 63% discount to our valuation of $2.25 a share.

Perseus is our highest conviction gold share. BUY"

 

[flyboy77]

From the same report, on Tengrela:

"Commentary: Tengrela is probably about two years behind Ayanfuri on the development timetable, and there is only one million oz defined so far, but but it is already showing superior economics and it promises to be much larger."

Now that puts things in perspective as Ayanfuri is already, based on the reported numbers, an OUTSTANDING story!

 

[CapnBirdseye]

Price has dropped back to 0.845 from up to 1.00 (I thinik)... there may yet be another buying opportunity coming up.. slowly slowly catchy monkey..

 

[Sean K]

Price has dropped back to 0.845 from up to 1.00 (I thinik)... there may yet be another buying opportunity coming up.. slowly slowly catchy monkey..

Yes, should be good support between 75-85 which I posted a while ago I think. Could be a good opportunity, as long as overall markets behave.

 

[Sean K]

PRU trading halt to announce a capital raising.

They have $10m in the bank...

DFS for Ayanfuri not due till July.

Maybe they're striking while the sp has gained traction.

I wonder if they'll give current holders a look in or just give the dicount to the instos and sophisticates?

 

[jman2007]

PRU trading halt to announce a capital raising.

They have $10m in the bank...

DFS for Ayanfuri not due till July.

Maybe they're striking while the sp has gained traction.

I wonder if they'll give current holders a look in or just give the dicount to the instos and sophisticates?

Your guess is as good as mine kennas,

Strike while the iron's hot maybe. Not sure what the immediate need for cash would be? Lots of conspiracy theories too; could it be the Canadians finally chipping in?... How much will they raise? At this price you would think an absolute minimum of $10M. What's it for? Surely they would want to fast-track the Ayanfuri DFS before we even start thinking about debt financing!

 

[jman2007]

Your guess is as good as mine kennas,

Strike while the iron's hot maybe. Not sure what the immediate need for cash would be? Lots of conspiracy theories too; could it be the Canadians finally chipping in?... How much will they raise? At this price you would think an absolute minimum of $10M. What's it for? Surely they would want to fast-track the Ayanfuri DFS before we even start thinking about debt financing!

It's a big one alright acording to the West Australian:

"Perseus to tap market for more funds:

...The West Australian understands that the WA-based gold miner is trying raise about $70 Million through a rights issue and placement to Australian and North American Institutional backers."

http://www.thewest.com.au/default.aspx?MenuID=32&ContentID=139699

Could give it a wee nudge along tomorrow?

 

[Sean K]

It's a big one alright acording to the West Australian:

"Perseus to tap market for more funds:

...The West Australian understands that the WA-based gold miner is trying raise about $70 Million through a rights issue and placement to Australian and North American Institutional backers."

Could give it a wee nudge along tomorrow?

Close, $75m at 82c.

And a 1 for 10 rights issue to punters at 82c too.

You'd have to think they've done well grabbing the cash above 80c. They've only been trading there for a couple of weeks.

What's it for:

The proceeds of the share offers will be used:

• to fund costs of Ayanfuri mine development including acquisition of plant and equipment;
• for continuing exploration on the Company's mineral properties, particularly at Tengrela and Ayanfuri; and
• for general working capital, including corporate overheads and administration costs.

Managing Director’s Comments

I am pleased to be able to announce this capital raising, one in which our existing shareholders will be able to participate to a significant extent. On completion of the offers, the funds will assist with mine development costs at Ayanfuri and will be particularly helpful in dealing with the “long lead” items of plant, equipment and infrastructure. It will also put the Company in a strong position to negotiate project finance upon completion of the Definitive Feasibility Study at Ayanfuri in July. I am also pleased to be able to offer participation to North American investors and, in particular, to key Canadian investors many of whom have been keen followers of Perseus’s progress.


Thoughts guys?