PRU - Perseus Mining

[jman2007]

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.

Thoughts guys?

Generally happy with the result kennas, although the markets response is a little muted. I personally don't have a major issue with the price, and Mum and Dad investors are able to take a bite too.

PRU's profile and connections with the Nth AMerican instos clearly instrumental for this equity raising. Ayanfuri was alwaus going to funded by a combination of debt and equity, so despite another 100M shares being issued, the long-term benefits need to looked at. ie. debt financing on more favourable terms.

What's your thoughts?

 

[CapnBirdseye]

Well it's quite a hike in capital. Currently the have market cap in $179m. They are looking for an additional 40% or so. If the cash is well invested it's a good thing. Quite a punt really, I'm suprised the SP hasn't been hit too hard. I was looking to get back in at around 78c, but now if the SP does drop to this level i'd be hestiant. Not ruling it out though.

 

[Sean K]

What's your thoughts?

Well, I was expecting them to wait till the DFS and then do the raising for total capex. It seems what they're doing is getting a pile of cash in the bank that they can leverege off for the rest of the funds required. Maybe it was the strength in the market over the past 2 months that has led them to take the opportunity. Who knows where we'll be in another 2 months. So, good move I think, and I am very happy with the price. Less dilution, and not too much of a discount for the sophisticates. Companies have had to issue shares at quite a discount recently to get funds. So, I'm happy enough to buy some more and hopefully get some more cheap shares at 82.

 

[exgeo]

Good to get their hands on as much cash as they can while there's positive sentiment about I'd say. Heard today on Stockanalysis feedback session that there's a head and shoulders pattern developing in Aussie dollar gold, pointing to much lower AUD gold prices (haven't verified though).

Perhaps they could do a Carrick if they raise enough? Carrick sold about $15m in new shares at 150c when the gittin was good, and now they're buying shares back at about half the price (while still keeping their toe on a large wedge of cash of course).

 

[Sean K]

Intersting pennant/triangely thing appearing here in a very nice uptrend and over significant horizontal support. Looks pretty bullish for a break up to me if that all holds. Should do unless a black swan lands in the pond. Hate those!

 

[Sean K]

Intersting pennant/triangely thing appearing here in a very nice uptrend and over significant horizontal support. Looks pretty bullish for a break up to me if that all holds. Should do unless a black swan lands in the pond. Hate those!

Potential breakup intraday, but intra day calls are for mugs. So, I won't be muggish enough to call it a break up at this time. But it has potential. Or, I'll be a mug.

 

[legs]

Looks like a big chance to me!!
I got on this morning hoping it had the potential.

Lets hope it can continue its run.

 

[Sean K]

Looks like a big chance to me!!
I got on this morning hoping it had the potential.

Lets hope it can continue its run.

Great break up, running with POG probably, and halted at the $1.00 ish resistance mark. POG up tonight and DOW surging so you'd expect follow through. Love you long time PRU!

 

[shag]

the spp forms out too
i love these wee bonuses.
easy too with bpay.
odly enough the market seems to have treated these cap raisings as positive news. i guess it shows how much monies were/are on the sidelines too.

 

[Sean K]

I can't believe LGL paid $350m for that woofer BGF when this is sitting here with a $160m MC.

They also paid $1.1b for Equigold which only has about 2m oz and is forecast to produce 120m oz a year, about half what PRU are planning to...

WTF!!!

With the sp coming off with the market weakness it's getting back towards sillily undervalued stage, if POG manages to stay aloft in the coming years.

A reminder of the last review done by Grigor:

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

 

[Sean K]

Goodman and Company out of Toronto coming onto the register with 20m plus and 6.7% voting power. Must have been part of the placement. It says they only paid 66c a share. What the?

 

[Golf 16]

Goodman and Company out of Toronto coming onto the register with 20m plus and 6.7% voting power. Must have been part of the placement. It says they only paid 66c a share. What the?

I am confused too Kennas. The SP seems to have dropped below your support line (Chart June 1). Given market sentiment do you believe a continued slump is on the cards? Indicators do not seem to be good (though charts can be confusing, for instance the Ultimate Oscillaotor of PRU shows an uptrend over the last 5 days against the fall in SP which can indicate a reversal of SP trend.) Is there any likelihood of further announcements eg of firming up resources into reserves?
Not in the swing ... Golf

 

[Sean K]

I doubt the fundamentals on this can go unloved forever. Would be hard to imagine this not turning into a 2 mine company in the coming years, which should naturally re-rate it as a producer. Producers are normally valued well above $100 an oz au to mc. It's currently just over $10 an ounce I think. Unless the info management is sending out is just BS.

The next news will probably be the BFS for Ayanfuri, due in July.

Maybe some drilling results from Trengrela potential resource upgrades.

 

[jman2007]

Well it looks like it was a good move to raise the cash when they did perhaps. Yeh I saw the Goodman and Co price @ 66c as well, thought maybe it could have been in Canadian $ but it's definitely $Aus... I think it deserves an e-mail.

I see Calderwood and Gillard have had a little bit of a dip recently. Tbh not really expecting any major news till next month either, when the BFS should hopefully be completed.

 

[jman2007]

Jeez, what the hell is going on with PRU atm? No real rhyme or reason for the persistent selldown that I can fathom. It is rapidly coming back under the banner of yet another ridiculously under-valued Resource Project(s) when you start factoring in the IRR for Ayanfuri and Tengrela.

Clearly has dropped through a major level of support here, anything we should be slightly concerned about here chartists? Depending on your viewpoint, some people may look at this as a golden opportunity I suppose. Next stop 65c? Tbh I'd be flabbergasted to see this roll back into the 40c range, but hey.. these are strange days indeed.

 

[Sean K]

Jeez, what the hell is going on with PRU atm? No real rhyme or reason for the persistent selldown that I can fathom. It is rapidly coming back under the banner of yet another ridiculously under-valued Resource Project(s) when you start factoring in the IRR for Ayanfuri and Tengrela.

Clearly has dropped through a major level of support here, anything we should be slightly concerned about here chartists? Depending on your viewpoint, some people may look at this as a golden opportunity I suppose. Next stop 65c? Tbh I'd be flabbergasted to see this roll back into the 40c range, but hey.. these are strange days indeed.

I'm seeing this as another opportunity. Although, I thought that with KMN when it started dropping back from $1.00 ish too.

Lots of support between 65-75 but who knows. The VIX is still around 30 so the market could make some wild swings in any direction. As we've seen, when the market panick sets in, nothing is saved.

The fundamentals they have presented don't look to have any holes. They just need POG to stay above $600 for a decent return (cash costs under $400) and to get the Capex (it's not that much).



Do we know exactly how many shares on issue now after the $75m raising? About 250m? MC $180? With $80m cash? 7m ounces Au worth $100m? HUH!

 

[Sean K]

Do we know exactly how many shares on issue now after the $75m raising? About 250m? MC $180? With $80m cash? 7m ounces Au worth $100m? HUH!

OK, 277m shares on issue @ .74 = $204m with about $80m cash gives an EV of $116m. With 7m ounces that is $16 an ounce of EV. Market average between $20 and $30 for explorers. For developers you can double that and for producers they can be anywhere up to $150 an ounce. Needs the Capex, but this is going to be producing 300k oz au pa in a few years. Is this a no-brainer, or have I no brain?

 

[jonojpsg]

OK, 277m shares on issue @ .74 = $204m with about $80m cash gives an EV of $116m. With 7m ounces that is $16 an ounce of EV. Market average between $20 and $30 for explorers. For developers you can double that and for producers they can be anywhere up to $150 an ounce. Needs the Capex, but this is going to be producing 300k oz au pa in a few years. Is this a no-brainer, or have I no brain?

Trust your instinct kennas - it's a no-brainer With that cash in the bank there is minimal risk that they would not get Capex funding, and the gold's all there waiting to be dug up.

On those numbers; $1 a share gives $200m EV or $30 an ounce,

within what 6 months max they move to being a developer (double to $2 SP)

and another 6-12 months makes them a producer (say double again $4 SP)

Given 74c at the mo, you gotta be loading up on the dips IMO!! I know I am

 

[jman2007]

OK, 277m shares on issue @ .74 = $204m with about $80m cash gives an EV of $116m. With 7m ounces that is $16 an ounce of EV. Market average between $20 and $30 for explorers. For developers you can double that and for producers they can be anywhere up to $150 an ounce. Needs the Capex, but this is going to be producing 300k oz au pa in a few years. Is this a no-brainer, or have I no brain?

Mate the only no-brainer here is the fact that Ashanti Goldfields should probably have never gotten rid of the Ayanfuri project in the first place . (I daresay there might be a few Ashanti Goldfields Exploration Geo's on the breadline now). Remember when PRU acquired this in June 2006, the Resource Base for Ayanfuri was a mere 0.2Moz, which in 3 years has increased by 5Moz. There nay be some nay-sayers out there, but unless PRU have been feeding the market verbal effluent for 3 years, I'm a believer.

The other thing to note is that of the 19 known deposits within the Ayanfuri Camp, PRU have only focussed on developing and drilling out 7 of them. Granted, many of them may end up being smaller than Fetish or Abna-Af-Gap-Fobinso, but with no apparent information on the depth potential of these deposits, who can say for sure into they put some holes into them? So the upside here is still potentially massive.

My holding average is 61c, it's a bit like trying to catch a falling knife right now, but hopefully we will see some support around the 72-75c mark.

 

[JnrTrader]

perhaps PRU now holding the 70c line and with the feas due this month ,this might be a good time to get in