PRU - Perseus Mining

[Sean K]

Looks like we might get a more steady flow of news over the next few months. Been pretty quiet since the placement.

UPDATE - WEST AFRICAN GOLD PROJECTS
Ramp-up of Exploration in Ghana and Ivory Coast

HIGHLIGHTS
• 10,000m of drilling completed at Tengrela in June, up from 4,250m in May
• May drill intercepts from Tengrela include 42m at 3.6g/t and 10m at 6.9g/t Au
• Perseus will have six rigs operating, up from two in June
• Soil programs are generating numerous new drill targets
• The Ayanfuri feasibility study is in on track for release in July

10,000m of drilling in June....
DFS due in the next 2 weeks...

 

[jman2007]

Looks like we might get a more steady flow of news over the next few months. Been pretty quiet since the placement.

Has been quiet since the share placement on the announcement front, but clearly pretty busy on the ground in Africa. They're in a very strong position financially, and can clearly afford to fast-track the development phase and the more regional scale exploration, while hopefully keeping the market informed.

Sissingue could still grow substansially, as the current Resource is only confined to about 1km of that 4km-long corridor. Have a look at the number of soil anomalies along strike that have yet to be drill tested.

 

[Sean K]

DFS out, and on the way to development.


Ayanfuri Gold Project Feasibility Study Confirms Robust Economics

The Directors of Perseus Mining Ltd (ASX Code: PRU) (“Perseus”) are pleased to announce the results of the Definitive Feasibility Study (“the DFS”) for the Ayanfuri Gold Project in Ghana.

The DFS, managed by Mintrex, confirms the attractive project economics previously indicated by earlier studies.

Highlights of the DFS include:

220,000ozpa production for the first four years
Initial 10 year mine life
EBITDA for first three years aggregate US$284M
Payback period of 1 year 7 months at US$850 gold price


Still off the radar for most investors imo.

 

[CapnBirdseye]

Seems that way Kennas. Everything seems positive in the DFS and looks like it should get the funding it deserves.

Stage 2 will bring new reserves also, so that should help the short term prospects.

Long term things seem very rosy - PRU are certainly on track to becoming a producer.

 

[jman2007]

Yep looked pretty positive to me too, in fact extremely positive. At least now they have a base-case scenario with which to approach the banks with. Seems like a very long construction period though, Q1 2010 with production commencing Q3 2011? Still not completely onside with the market yet though, DFS's can also trigger bizarre market reactions - the recent IGR shellacking as an example!

 

[exgeo]

Headline from research note by Warwick Grigor at BGF Equities, released today:

Investment Perspective: The release of the Definitive Feasibility Study (DFS) is a major step along the path to finance and development. It is a challenging task to finalise a DFS when the resource base is expanding so strongly. An additional 3.2 mill. oz have to be brought into a Stage Two study. This will provide substanitally improved numbers and could point to a post-commissioning expansion up to 7 mtpa for 300,000 oz p.a. of gold. Importantly, the DFS released today confirms the size and the potential profitability, demonstrating that it is one of the leading ASX-listed emerging gold producers. The Company is currently working on the 43-101 statement in preparation for an anticpated Canadian listing, tentatively scheduled for later this year. Given the premiums at which its peer group is trading in Toronto, relative to PRU, we expect strong interest and a higher share price over the coming months. The Bottom Line: Updating the models for todayʼs DFS figures, Ayanfuri has a pre-tax NPV of $2.27/share. Add the value of Tengrela ($0.74/share) and cash of $80m and the shares still have considerable upside from these levels.

....................................................

 

[Sean K]

PRU and AZM get a mention in the one article.

Cheers Matt.

(although you need to read up on AZM, it already has 2 maiden resources, they're looking to upgrade them)

Going into development PRU really should be trading at a higher EV to oz au multiple. Explorers ave $30, developers $50 plus, and miners $100-$150 an ounce.

PRU have 7m ounces all up.

300m on issue @ 75 c = $225 less cash $78m = $147m EV. Gives $21 an ounce value.

Compare to another W African explorer GRY:
166m@30c = 49.8 less cash 12m = 37.8m EV
820k oz au = $46 an ounce.
Has huge exploration upside, but double the value per ounce of PRU?

If you slap the $50 an ounce projection on PRU that's a $350m EV, or (discount the cash elm) or $1.16 a share.

That's approximately what it should be trading at right now imo. Once into production, slap the $100 an ounce value on them.


Perseus reveals gold target
Matt Chambers | July 30, 2009
Article from: The Australian

GHANA-focussed gold hopeful Perseus has declared a maiden resource of 2.14 million tonnes of gold at its Ayanfuri project, which it hopes to have in production in the third quarter of 2011.

A definitive feasibility study shows a $148 million open pit mine development could produce 192,000 ounces a year for 10 years at an average operating cost of $US494 an ounce.

In the first four years, production would be about 220,000 ounces a year, while costs would be $US392 an ounce in the first year.

Perseus, who wants to start construction this year, fell a little on the news and was recently down 2c at 74c.

This could be due to a little disappointment in the numbers.

In April, Perseus was flagging a $134 million mine that would produce at $US354 an ounce in the first five years.

Still in the small West African nation, Azumah Resources (named after Ghana’s favourite boxing son) released new drill results for its WA Gold project, where it is hoping to get a maiden resource by the end of the year.

An RC drilling program there intersected, wide high-grade oxide gold mineralisation at the Kunche prospect and identified two new zones of shallow gold mineralisation nearby at Bepkong North and Kunche West.

Intersects included 29m at 4.02g/t gold from 6m intersected in Kunche oxide zone.


(holding PRU, AZM, and GRY)

 

[Sean K]

Another $2.75 target slapped on this turtle.


Perseus perceived to be worth its weight in gold
What the brokers say: Sarah-Jane Tasker | August 03, 2009
Article from: The Australian

Perseus Mining (PRU); Rodman & Renshaw; Market outperform; Target price of $2.75;Last traded at 75c

PERSEUS has finally received some deserving attention after it revealed a maiden reserve of 2.14 million tonnes of gold at its Ayanfuri project, which it hopes to have in production in the third quarter of 2011.

The Ghana-focused company said last week that a definitive feasibility study showed a $148 million open pit mine development could produce 192,000 ounces a year for 10 years at an average operating cost of $US494 an ounce.

Rodman & Renshaw said in its report on the stock that the results of the study confirmed its view that the Ayanfuri project was one of the most attractive underdeveloped projects in West Africa.

The Ayanfuri project in Ghana is expected to commence commercial production in 2012.

Perseus holds 90 per cent of the Ayanfuri project, located in the Central Ashanti region of Ghana.

It is located 25-65km southwest of Obuasi on the Ashanti Gold Belt and is one of the largest undeveloped gold projects in West Africa. The project has 5.3 million ounces of gold resources.

The company says it believes there is significant additional upside potential at Ayanfuri with scope for expanded throughput and gold production within a short time after project commissioning.

 

[CapnBirdseye]

Another $2.75 target slapped on this turtle.


Perseus perceived to be worth its weight in gold
What the brokers say: Sarah-Jane Tasker | August 03, 2009
Article from: The Australian

Perseus Mining (PRU); Rodman & Renshaw; Market outperform; Target price of $2.75;Last traded at 75c

PERSEUS has finally received some deserving attention after it revealed a maiden reserve of 2.14 million tonnes ......

Sarah Jane may need to check her copy. If only PRU were sat on 2.14 million tonnes of gold reserve.

However, this is one of a number of positive broker reports for PRU. Expect to see a rocket up it soon.

Also more reserves are expected in phase 2 of the feasibilty report, so other than a collapse in the POG I fail to see any downside.

 

[CapnBirdseye]

Had no idea this was coming up. Mark Calderwood on the Ayanfuri Feasibility Study. http://www.brr.com.au/asx/PRU/perseus-mining-limited/

I can’t listen at work, I’ll have to wait till I get home. The latest presentation from Mark was pretty good.

 

[JnrTrader]

i think everyone is starting to realise the true potential of PRU.a huge increase in demand today, hopefully this can continue

 

[Sean K]

Just rechecking trough PRU's last anns to see what news might be coming up, to potentially add value. Several rigs seem to be drilling both projects at the moment, and results from previous drilling at Tengrela should become available. The resource there is bound to grow, but not sure when another resource estimate is planned. Most focus seems to be on Ayanfuri and Stage 2 DFS to bring more ounces into the Reserve category to improve the robustness of the project. Not sure why they can't just start running on the DFS released. It clearly shows that it's feasable now without additional ounces. Just buy a mill and start digging PRU!!

This has got takeover written all over it imo.

The recent review by BGF indicates these possible price drivers:

Share Price Drivers and Forthcoming News Flow

We always have to be mindful that gold companies can go into a “black hole” once a DFS study is finished and financing negotiations commence, so what is the news flow that will keep Perseus in the headlines? We can look
forward to the following;

• Conversion of more resources to the reserve category at Ayanfuri
• Announcement of tenders opening for construction of the project and commitment to long lead items
• Progression of the Canadian listing plans and the release of the 43-101 statement in late August/early September
• Increased research coverage in Australia and Canada (very few brokers cover it in Australia, other than BGF)
• Pre-feasibility study results on Tengrela, in the Ivory Coast (130,000 oz p.a.)
• Exploration drilling results from Tengrela (moving from two to four rigs, drilling commencing now)
• Continued drilling at Ayanfuri with two rigs about to recommence drilling

And:

It is only a matter of time before the suitor moves on PRU. The increasing reserves and the extra confidence following the DFS is shortening the odds of a takeover bid as every day passes.

 

[Sean K]

Just checking a presentation by Adamus comparing reserve ounces to EV compared to other W African goldies and the range seems to be between $170 and $380 for the more advanced projects.

PRU have about 300m on issue @ 80c = $240 with $75m cash gives EV $165.

2.1m reserves gives an EV to reserves of $78.

The reserves are likely to be doubled at least over time so a future EV to Reserves of about $40 makes it look way cheap compared to these others.

Must be some other factors as to why it's trading so cheaply. Grades are pretty low maybe, but not too much lower.

 

[Sean K]

Fundamentals seem pretty clear here. Pretty good on a comparitive basis, but maybe it's the stage of the cycle we're in that makes this under loved. Perhaps difficulty in future project financing is the issue.

Has taken a shalacking the past couple of days after approaching long term significant hurdle at $1.00 ish. Perhaps only general market strength and/or POG breakthrough $1050 ish will push it through. Or, maybe a surprise number from the Tengrela upgrade. Would have to be double I reckon to make the market wake up.

I hope that isn't a potential H&S neckline there. eeek

 

[jonojpsg]

Fundamentals seem pretty clear here. Pretty good on a comparitive basis, but maybe it's the stage of the cycle we're in that makes this under loved. Perhaps difficulty in future project financing is the issue.
Has taken a shalacking the past couple of days after approaching long term significant hurdle at $1.00 ish. Perhaps only general market strength and/or POG breakthrough $1050 ish will push it through. Or, maybe a surprise number from the Tengrela upgrade. Would have to be double I reckon to make the market wake up.

I hope that isn't a potential H&S neckline there. eeek

C'mon kennas, difficulty in financing when they already have about half the cash they need to get Ayanfuri up and running?? Agreed though it seems to have run into resistance - was hoping to see it break that magic $1 but looks like might be waiting a bit longer

 

[Sean K]

C'mon kennas, difficulty in financing when they already have about half the cash they need to get Ayanfuri up and running?? Agreed though it seems to have run into resistance - was hoping to see it break that magic $1 but looks like might be waiting a bit longer

I'm just clutching at straws to understand why it seems to be so undervalued. Maybe it's the amount of low grade stuff they're including in the overall resource. Maybe it's just the overall negativeness of the market. Although, this has recovered from about 30c, which was a remarkable low point for a company with so much gold in the ground.

I am cautious on this because another company I researched for some time has about 12m oz au equiv in the ground, open pit, low grade, low strip ratio, and has turned into a complete turkey, and I doubt it will ever mine.

Sometimes big resources never get to production, for various reasons.

On the sum of it, you'd still have to think this will be a miner and eventually be rated accordingly. ie, over $100 an ounce.

Surprised we haven't had any new drill results out. There was a large campaign in June, and on 14 July they stated a 'steady flow of drill results'. Maybe I'm being impatient.

 

[jonojpsg]

I am cautious on this because another company I researched for some time has about 12m oz au equiv in the ground, open pit, low grade, low strip ratio, and has turned into a complete turkey, and I doubt it will ever mine.

You talking KMN? I have followed your comments on that thread and yes, I can imagine how you would be cautoius after watching them stuff things up!! Is the comparison valid though - eg does the fact that KMN grades included Ag and others? whereas PRU is all Au? That is if it is KMN you're referring to?

 

[shag]

You talking KMN? I have followed your comments on that thread and yes, I can imagine how you would be cautoius after watching them stuff things up!! Is the comparison valid though - eg does the fact that KMN grades included Ag and others? whereas PRU is all Au? That is if it is KMN you're referring to?

isn't silver/ag better than gold presently?
i certainly like the silver market anyway.
i think the whole story is lack of total full disclosure. logistics, other variables etc that some are privy too at times. things only geo's/managers and alike sometimes know or suspect.

 

[Sean K]

Yes, was KMN, I'm still in disbelief than San Anton is sitting there unmined. Yes, lots of Cu and Ag as well, but LOTS! It's a bloody hill that just needs to be scraped away. Must be something wrong with the metallurgy.

 

[Sean K]

PRU seem to be advancing their project financing ok.

Bought some Puts as a hedge. Sounds like a reasonable plan to me.

By reading this ann I get the impression that are after predominantly debt financing for the first project and not going to issue shares. I thought it might have been a half and half type deal.


COMMENCEMENT OF AYANFURI PROJECT FINANCE STRATEGY

Perseus Mining Limited (ASX: PRU) is pleased to announce it has taken an initial step in the execution of its Ayanfuri Project finance strategy by purchasing gold put options (“Puts”) maturing over 2012 and 2013 for US$9.1 million. The Puts are over 100,000 ounces, representing approximately 22% of planned production in that period, enabling the Company to sell those ounces at US$850/oz should the prevailing price be less, or at prevailing spot prices if
they are higher.

Purchasing the Puts at a time of relatively low volatility and the prevailing gold price of $956 per ounce has provided a cost effective method of underpinning Perseus’s project financing objectives whilst maintaining maximum flexibility and upside.

The Company through its financing advisor Noah’s Rule is currently in discussions with leading project financiers in relation to securing debt funding for the 220,000 ounce per annum Ayanfuri gold project in Ghana.

Importantly, by acquiring the Puts in advance of completing negotiations with financiers the Company has greatly enhanced the overall bankability of the project in all future price scenarios and should substantially reduce the level of committed hedging that might otherwise be required. The Puts are also a liquid asset of the Company that can be sold at any time prior to their expiry.