PRU - Perseus Mining

[Sean K]

Geesh, been smashed since the March Qtr report. Hitting some longer term support perhaps. Quite a dip based on? Sudan? Profit taking? POG has only recently come off a bit.

 

[mullokintyre]

PRU announced that following a calming of things in Sudan, that it will allow employees and contractors to return to Sudan.
May have a very small positive influence on PRU SP.

Mick

 

[Sean K]

PRU announced that following a calming of things in Sudan, that it will allow employees and contractors to return to Sudan.
May have a very small positive influence on PRU SP.
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Mick

Hard to make a FID with so much uncertainty. Could be going on for a while. Even though the mine is so far from the action the general instability would make it pretty tough. They've probably chosen one of the riskiest African countries to build a mine, and that's saying something...

 

[mullokintyre]

Quarterly out ..
Some very attractive figures in there.
Gold production exceeded guidance, AISC lower than guidance.
Half a bill in cash and bullion. and no debt.
Expecting a nice divvy from it all.
great stock.
Mick

 

[Sean K]

Quarterly out ..
Some very attractive figures in there.
Gold production exceeded guidance, AISC lower than guidance.
Half a bill in cash and bullion. and no debt.
Expecting a nice divvy from it all.
great stock.
Mick
View attachment 160071

What are they going to do with all that cash? Sudan development is on pause for the foreseeable future.

You think dividends, Mick? Do they have a divvie policy?

I guess M&A is a very high probability. Just a matter of time before they buy something else.

 

[mullokintyre]

What are they going to do with all that cash? Sudan development is on pause for the foreseeable future.

You think dividends, Mick? Do they have a divvie policy?

I guess M&A is a very high probability. Just a matter of time before they buy something else.

View attachment 160075

They paid out 14 mill in dividends last quarter, so i expect that much again at least.
As for M & A, they may have something in mind, but will it be a better or worse for incumbent shareholders, who knows.
I would prefer for someone else to come in and take them over, maybe at a huge premium!
Mick

 

[Sean K]

They paid out 14 mill in dividends last quarter, so i expect that much again at least.
As for M & A, they may have something in mind, but will it be a better or worse for incumbent shareholders, who knows.
I would prefer for someone else to come in and take them over, maybe at a huge premium!
Mick

Agree, better to be on the other side of M&A.

 

[Sean K]

PRU and DEG both looking more interesting down around these levels, depending if POG capitulates below $1900 psychological support....and what PRU does with all that $$ laying about. Must be burning a hole in their pocket. Can't make a rash decision with it.

 

[mullokintyre]

The PRY MRE update today was in some ways a little bit deflating.
After allowing for depletion of reserves due to mining, the actual gold contained only increased by 2%.
The Tonnage of ore actually decreased by 10%, but the gold increased due to higher cutoff values/
A bit underwhelming, was hoping for at least 10% increase in MRE.

Mick

 

[Sean K]

The PRY MRE update today was in some ways a little bit deflating.
After allowing for depletion of reserves due to mining, the actual gold contained only increased by 2%.
The Tonnage of ore actually decreased by 10%, but the gold increased due to higher cutoff values/
A bit underwhelming, was hoping for at least 10% increase in MRE.
View attachment 161323
View attachment 161324
Mick

Yeah, I wasn't sure what to expect. Good they've covered for depletion but I thought some of the extension drilling reported over the past year might have added more.

They could double their resources by buying PDI.

 

[Sean K]

This all sounds very nice.

Just what are they going to do with that $785m cash and bullion burning a hole in their pocket?

 

[mullokintyre]

Yeah, I wasn't sure what to expect. Good they've covered for depletion but I thought some of the extension drilling reported over the past year might have added more.

They could double their resources by buying PDI.

PDI market cap at 425mill should be adequately accommodated by that 785 mill cash, even allowing for a 20% premium.
I have both, so would prefer if PDI was taken out by someone else.
Mick

 

[Sean K]

PDI market cap at 425mill should be adequately accommodated by that 785 mill cash, even allowing for a 20% premium.
I have both, so would prefer if PDI was taken out by someone else.
Mick

They could almost buy WAF with cash as well and add 12m ounces.

 

[mullokintyre]

PRU announcement out today about extending the life of the YAOURE mine out to 2035, with the possibility of further extensoons with additional drilling. Ore reserves now showing over 2 million ounces of gold.
My average buy in price is still just over 2 bucks, so need good jump to get out of the red.
One of my larger holdings, so any increases in price will have a good impact on the overall picture.
mick

 

[mullokintyre]

PRU quarterly out today makes very pleasant reading.

One of the very few goldies still having an AISC under 1K.
lotsa cash, and with no debt, but with 300 mill debt facilities available should they find something they need.
The biggest of my gold holding, but still need to get back above 2 bucks to make some money.
Mick

 

[Sean K]

PRU quarterly out today makes very pleasant reading.
View attachment 164533
One of the very few goldies still having an AISC under 1K.
lotsa cash, and with no debt, but with 300 mill debt facilities available should they find something they need.
The biggest of my gold holding, but still need to get back above 2 bucks to make some money.
Mick

US$1K cash margin is amazing. AUD $950m in cash and bullion, WAF MC $750m... Come on PRU, you know it makes sense.

 

[mullokintyre]

looking at the share price performance versus spot gold, it seems to my admittedly biased on eye, PRU seems to have been consistently undervalued.

Mick

 

[Sean K]

looking at the share price performance versus spot gold, it seems to my admittedly biased on eye, PRU seems to have been consistently undervalued.
View attachment 164891
Mick

PRU v GDX v GLD have sort of followed each other, but stocks are not keeping up with POG. I think the war premium is only realised in POG and not really in the stocks as they are more susceptible to other market factors like inflation.

Not sure why Iress doesn't allow me to overlay prices on the one chart. Frustrating.

 

[Sean K]

I'm not sure why PRU would just take a minority stake / strategic investment in this. To buy the whole thing they'd have to give Silvercorp a premium, but if they had have really wanted it they could have bought them out for much less a few months ago. Surely they were looking closely once Sudan fell over and they realised they had hundreds of millions in the treasury earning interest...

Now, the $2.37 billion Perseus Mining has acquired a potential blocking stake to the mooted deal, after stockbroking and funds management firm Euroz put together a group of sellers of OreCorp shares, understood to include AustralianSuper-backed Federation Mining.

Perseus was viewed as the logical buyer of the block of shares given its proven track record in developing large open pit mines in Africa. Its strategy is to be diversified across various African nations to mitigate against sovereign risk in any one country. Perseus doesn’t yet have a mine in Tanzania.

Silvercorp’s sweetened offer for OreCorp on November 23 boosted the cash consideration part of the deal by 27 per cent to 19¢. The scrip consideration of 0.0967 Silvercorp shares for every OreCorp share remained unchanged, the African company said.

But while the consideration increase from Silvercorp in the form of cash was welcomed (given the reticence for ASX gold investors to take scrip in a TSX-listed company with silver, zinc and lead mines in China), sources noted the offer was still significantly scrip-weighted.

For Perseus, a stake in OreCorp may afford the gold miner serious leverage. While it’s unlikely to launch a full takeover, Perseus could seek to position itself as a joint venture partner, strategic investor at the head company level or even alongside Silvercorp as a partner given the latter’s lack of experience and knowledge in Africa

It will be interesting to see Silvercorp’s next move and whether it responds to the latest development by launching an unconditional bid. But even if the Canadian company is successful in gaining control via a takeover, it will likely end up with Perseus – which has the track record, balance sheet and government contacts – as a minority partner.

 

[Sean K]

I really don't get this. What's the value creation or return to shareholders? It's going to take years before ORE's project is up and running, if at all.

Looks like they've just got too much money burning a hole in their pocket.