PRU - Perseus Mining

[Sean K]

Some really good points jancha. The tax issues and profit sharing may be the key.

 

[jancha]

Some really good points jancha. The tax issues and profit sharing may be the key.

Noted PRU had a dramatic jump as with a few other Gold Companies after the US election announced Obama as president. Gold stocks were only slightly up prior to the announcement with the POG up $30+ over night but when the results were announced they jumped significantly.
Why would a change in government have any dramatic effect on the POG and stocks similar to PRU RED NCM ect.?
IMO Judging by the close today Gold Stocks should continue to head north in trade tomorrow.

 

[Sean K]

Why would a change in government have any dramatic effect on the POG and stocks similar to PRU RED NCM ect.?

QE3 is on the cards. Printing money is good for POG. Romney wasn't pro-printing.

 

[jancha]

QE3 is on the cards. Printing money is good for POG. Romney wasn't pro-printing.

Point taken but QE3 is already in place..Just splashing out more money when needed.

 

[Sean K]

Point taken but QE3 is already in place..Just splashing out more money when needed.

I read somewhere that there was potential for another one off massive expansion, not the $40b or so a month currently being trickled in. Maybe that's not a chance.

I just finished a google on 'ghana mining tax' and I think it's pretty clear why PRU have been held back over the past year or so. As gold has kept steady and PRU have delivered the Ghananan Gov have been hatching plans to increase taxes. How far will they go? No wonder punters like AZM are in the dog house.

 

[jancha]

I read somewhere that there was potential for another one off massive expansion, not the $40b or so a month currently being trickled in. Maybe that's not a chance.

I just finished a google on 'ghana mining tax' and I think it's pretty clear why PRU have been held back over the past year or so. As gold has kept steady and PRU have delivered the Ghananan Gov have been hatching plans to increase taxes. How far will they go? No wonder punters like AZM are in the dog house.

PRU had a reduced value of 9% back in 2011 and quoted at $5 per share with the tax rate of 35% in mind. That was back then. They not only seem to have been held back now but have dropped in value given the gold ratio ect.
Government was also talking about a 10% windfall tax back then but atm just talk. There has to be a balance as Ghana dont want to discourage mining companies from developing there as their econonmy is solely about mining so i dont think they can afford to be too greedy. Also the article about 10,000 chinese mining illegally causing unrest wouldn't be helping the situation. ( two mining deaths reported.... not the kind that happen by accident)
Anyway looking at PRUs current sp of $2.43. Dipping slightly today whilst others are making gains and down 15% in just over a month. So i'm wonder if there is another issue..I noticed that at the AGM Rhett Brans was re elected as Executive Director 162mil for and 147mil against. Very close call. Maybe that may have something to do with the decline? He cant be to popular. Maybe share holders getting out?
PRUs latest quarterly report they were only down 4% in forecasted production so you wouldn't even consider that as a factor. The report look quite good in fact.

 

[Sean K]

PRU had a pretty forgetful 2012 with it being topped off with their first real production issues.

2 January 2013

Edikan Gold Mine Production Update

Gold production at Perseus Mining Limited’s (ASX/TSX: PRU) Edikan Gold Mine in Ghana is now estimated to be 49,000 ounces for the December 2012 Quarter. The lower end of the revised production guidance announced on 23 November 2012 for this quarter was 58,500 ounces.
The production shortfall resulted, principally, from low crusher output from the time of the November guidance until the planned December maintenance shutdown, followed by a much longer than expected shutdown of eight days in December for the liner change and remedial work. The production shortfall was exacerbated by a shortage of crushed material on the coarse ore stockpile to feed the mill during the crusher shutdown and lower recoveries largely attributable to milling a higher proportion of oxide ore to compensate for the lack of crushed primary ore.
After the crusher recommenced operations on 21 December it crushed 162,193t in the first 149 operating hours at a near record rate of 1,088t/hr, excluding additional oxide feed of 148 dtph.
The Company will provide a detailed update on the Edikan primary crusher and mill performance with the release of the quarterly operating results in mid-January after all production and maintenance reports have been received and reviewed.

Halved in value since peak of $4 at the gold peak in Sep 11. Since then though, POG has gone down 10-15%, while PRU nearly 50%.

NCM has halved as well I suppose but has more direct company related issues than PRU. Unless Ivory Coast is the issue. The potential 'Extra Profits' tax probably creates enough uncertainty to kill easy finance. Hm, maybe that's it.

Not sure if OPEX has been an issue. GCC around $800 maybe a negative. Their 'adjusted' costs plus royalties, or ACC+R has been $830, 782, and 569. They were quoting 'C1 Cash Costs/oz' of between $535 and $580 in mid 2011 presentations I think so that doesn't look too good either.

Dropping through $2.25 looks ugly. If it regains that level quickly and bounces well that would be a positive sign. Otherwise, ouch. Maybe $2.00 in early 2010 will support.

 

[Sean K]

Not sure if OPEX has been an issue. GCC around $800 maybe a negative. Their 'adjusted' costs plus royalties, or ACC+R has been $830, 782, and 569. They were quoting 'C1 Cash Costs/oz' of between $535 and $580 in mid 2011 presentations I think so that doesn't look too good either.

Dropping through $2.25 looks ugly. If it regains that level quickly and bounces well that would be a positive sign. Otherwise, ouch. Maybe $2.00 in early 2010 will support.

View attachment 50350

Certainly looks like failing at the $2 support level. Crashing into the low $1.80s today after a bad quarterly and the CEO being sacked. I thought the real problems were out of his hands actually. The tax issues for Ivory Coast seem to be the real problem. Although, I do note, they have come out with another measure for OPEX at Edikan. This one is called 'Total site cash costs'. I thought this must have been GCC mentioned above, but it's not. This comes in at $1060 for Dec 'actuals' and was $1027 for Sep 'actuals'. Why do they keep twisting around the OPEX definition and giving us different numbers? By this definition it looks pretty crappy, that's for sure.

Is it getting canned because Trengela/Siss is close to Mali?

It's getting cheaper and cheaper by the day. Woof.

 

[Calliope]

Now might be the time to get back into PRU. Macquarie think that their crusher problems will soon be over.

Action and recommendation
 Outperform. While the ongoing disruptions at Edikan have continued to weigh
on the stock, we believe that their impact on both FY13 and FY14 earnings
are baked into the current share price. As the root of the problem appears to
have finally been identified, the eventual resolution of the crusher to its full
nameplate capacity will help to drive a significantly improving production profile.
 As Perseus demonstrates improving production over the course of 2H 2013,
we believe that there will be a closing of the current P/NPV discount that it
trades at relative to its peers.

 

[JTLP]

Unfortunately gold is on the nose so you're probably best waiting out...perhaps this is the end for gold?

 

[namrog]

If PRU doesn't pull up around $1-50, as this is the next serious level of support then all bets are off..

Will be looking for signs of a reversal around then..!

 

[brerwallabi]

If PRU doesn't pull up around $1-50, as this is the next serious level of support then all bets are off..

Will be looking for signs of a reversal around then..!

Near enough every gold stock is being slaughtered PRU is no different. Think of the money we will will make when it turns around when the gold price takes off again.
Its a hard one to say when to get back in.
Gee the banks are doing well its hard one to say when to get out.

 

[Sean K]

I'm not sure if this cycle in gold is just a correction in the longer term bull, or it's peaked. Maybe once another stimulus comes in and we start actually getting real inflation? Maybe a real war?

 

[shag]

Now might be the time to get back into PRU. Macquarie think that their crusher problems will soon be over.

dont mac bank hold a wack of stock, or did they sell out?
im concerned they have monkeys running the plant, and still insitu, like in report the lubes wernt even being maintained correctly.
like its an off the shelf plant. maybe a mech enger could state how hard it is to install and maintain, run too i guess.
these things are usually way overdesigned and installed.

i realise all rock types have different characteristics but it sounded severely stuffed n abused.
maybe a few incentives are required, like not throwing u in the crusher one night, if u do yr job....

 

[shag]

I'm not sure if this cycle in gold is just a correction in the longer term bull, or it's peaked. Maybe once another stimulus comes in and we start actually getting real inflation? Maybe a real war?

a small war with the dirty japs wouldnt go amiss for labour, down south. to me its their only choice for victory.
would b interesting re alliances n reinvigorate the industrial sectors here.
any war is going to enhance nationalism though, so further endanger these non australian mines, imo.

 

[monaroman76]

If PRU doesn't pull up around $1-50, as this is the next serious level of support then all bets are off..

Will be looking for signs of a reversal around then..!

Stock price rebounded off the 1.50 support. Will it be tested again? Or could this be the reversal?

 

[shag]

Stock price rebounded off the 1.50 support. Will it be tested again? Or could this be the reversal?

to me its never respected boundaries much, with these fellas im very wary that we are the mushrooms.
it seems cheap unless plant is still problematic etc, or war is arriving, or tax shifting etc.
u need a mate on the ground imo.

still i hold like a sucker or mushroom.

is it legal to subcontract say the mill operator to supply general info? in a build n use, often systemic and root problems are only know by the guys onsite, till it all goes totally bung. ive seen plenty of attempted coverups.

kennas loves travel so maybe he could transform into a plant operator for a month.

 

[Sean K]

This sounds promising.

Comments from Perseus’s Managing Director, Jeff Quartermaine

“The remediation of the crusher at Edikan has occurred as planned and Perseus is now looking forward to putting the technical challenges of late 2012 behind us and returning to the gold production levels that we know the Edikan Gold Mine is capable of delivering. Production of nearly 36,500 ounces of gold in the March 2013 Quarter to date, in spite of the challenges presented by the crusher is encouraging and has provided a solid start towards achieving production guidance for the first half of this calendar year.

This achievement is largely the result of hard work by our employees at Edikan and the technicians from FL Smidth, all of whom have very pleasingly risen to the challenge of getting production back on track as soon as possible.”

Now, if Ivory Coast can be sorted out, you may have seen the end of the downward spiral.

 

[shag]

yes it seems as if they have gone thru a process of eng tough love.
hopefully they learn from the seemingly extreme errors and as well use this period to set up processes to run the mills etc v v efficiently, sans large downtimes
seems uneccessary tho imo, getting retaught by the real engineers/technicians.

at least next plants should be done well. for all we know, the boom then meant some gear was not built as well as usual too re manufacturers.
only a bill of market cap. lost or so for the lessions etc

This sounds promising.



Now, if Ivory Coast can be sorted out, you may have seen the end of the downward spiral.

 

[mr. jeff]

as with some of the goldies, PRU is showing a change of trend. These lows have not been seen since 2011 and might offer a good entry point if POG stays strong. No time for chart sorry, someone else might add if they can?