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PRU - Perseus Mining

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Should be a stand-alone release I would say,

Sitting on a small loss atm, but the Ayanfuri resource re-calculation will be pivotal in my decision about what to do with my holdings. If we believe what PRU are telling us, Ayanfuri could be huge. Just need some further clarification about where they intend to go with this, in more specific terms than just "proceeding with development" etc.

They could continue in this current vein for another 12 months, ie drilling in an around Ayanfuri and adding to their global resources, or begin to explore some serious options for starting to develop this project. Or perhaps they want to have their cake and eat it too....

jman
 
An interesting comparison is Newmont's Ahafo mine (and Akyem project) in Ghana.

"Reserves have grown from a combined 3.3 million ounces in 2002 to 20.3 million ounces at year end 2006."

If Newmont like the country and have had that sort of exploration success, name me a gold company that PRESENTLY wouldn't be interested in Ayanfuri?

Why do you think PRU is drilling the lights out of the many targets at Ayanfuri in a serious hurry.....?
 

flyboy

It's premature to be worrying about Corporate manouvers at this stage imo. There is a long road ahead for everyone involved.

Yes, Ayanfuri could be huge, but there is still risk involved. The way these big companies like to operate is to wait for their earmarked projects to proceed to development and/or production, as a way to reduce exploration risk.

Even if Ayanfuri doubled in size, it doesn't necessarily mean outside parties will be swooping in on it right way. Investors first need to be informed of where PRU are taking this project, and the plans they have in motion to explore the other untested targets around the prospect.

I imagine we'll know more in a few weeks.

jman
 
Huge resource increase here,

At Ayanfuri:

- A 68% increase in resources along the Abnabna-Fobinso zone, to 1.55M oz.

- A 46% increase for the Esuajah and Fetish group of deposits, which now stand at 2.07M oz.

PRU's total gold inventory in Ghana now stands at 4.7M oz. In light of the ongoing resource definition drilling here, and the recent discoveries such as Poku and Mampon, imo this highlights Ayanfuri's potential as a world-class deposit.

Looking forward to the completion of the feasibility study in a few months .

jman
 
Comments below from Perseus managing director Mark Calderwood:

“So far we’ve only provided resource estimates for seven of the 19 deposits previously mined – two new discoveries, Mampon and Poku, are still to be evaluated,” he said. We’re targeting an increased resource to 8 million ounces with reserves potential to 4 million ounces by the end of 2009.”

Which means they are looking at roughly doubling the resource in about 18 months, and given their current rate of additions you would imagine this is not implausible.

Cheers V
 
I was wondering myself when they planned to start evaluating the other deposits in the Ayanfuri camp, I think PRU are setting themselves up for a pretty fruitful year ahead with probably in the order of at least 60-80,000m of drilling on the cards.

Based on their recent performance, 8M oz doesn't sound like it's out of the question.

jman
 
Perseus' African gold hunt gives it new goals
Barry Fitzgerald
May 12, 2008

THE last time Garimpeiro had a look at Perseus Mining (ASX: PRU) was in December 2006, when it was a $40 million company (40 ¢ a share) and it had an ambition to get a 3 million-ounce gold resource under its belt from projects in West Africa and Central Asia.

That 17 months later it is a $200 million ($1.18 a share) company tells you that it has had a good measure of success.

In fact, it has done better than expected, with the resource base in Ghana alone passing 4.7 million ounces.

When the big-time exploration potential of projects in the adjacent Ivory Coast is added, it is little wonder that West Africa has very much become the group's focus, with plans to spin off the Central Asian interests into a new listing (Manas Resources).

Continuing success in the West African gold hunt has prompted a reset of the group's corporate goals. Its targets now include an 8-million-ounce resource base there by 2009 and, more importantly, a mining reserve of 4 million ounces ahead of the march to producer status.

There is no bunch of investors prepared to back West African gold plays more than the Canadians, so part of Perseus' forward planning is to capture the higher market ratings the Canadians give for ounces in the dark continent by listing on the Toronto Stock Exchange.

Having said that, it has not been lost on the Australian market that the local No. 2 listed gold producer, Lihir, has made a $1.1 billion bid for Equigold, with a big chunk of Equigold's valuation tied up with its 85% ownership of the soon-to-commission Bonikro goldmine (140,000 ounces in 2009) in Ivory Coast.

Perseus is not at the starting stalls as a producer just yet but it is working on feasibility studies into the development of its Ayanfuri and Grumesa gold deposits in Ghana, with a development decision likely this year and first production possible in late 2010.

As it is, on its current resource base, Perseus is trading at less than $50 an ounce. That is at least half the going rate for ASX/TSX-listed gold explorers/developers that have their main focus on West Africa. An investor roadshow is under way in Europe to highlight that position.
 
Starting to run pretty hard,

Has gained around 20% or so during the week, and yet the PRU thread is strangely silent, which actually aint' very unusual!...

I quite enjoyed reading the PRU European Investor Presentation, as it clarified many points for me, significantly:

For 2008:
- 160,000m of drilling planned
- Goal to increase resources to 6M oz
- Reserve Target of 2M oz
- Order long-lead items, production timetable

For 2009:
- Increase Resources to 8M oz, and Reserves to 4M
- Commence PFS for Tengrela, Ivory Coast
- Commence Construction at Ayanfuri, Ghana

Certainly still compares very favourably on a peer comparison basis when considering the MC/oz factor of $50, (marginally more expensive than poor old ADU down the road at Salman . I imagine when conversion of some resources to reserves takes place the disparity will be even more apparent. Calderwood seems to be delaying the TSX listing until the sp approaches $1.50, and obviously wants to strike while the iron is hot.

I might start taking a bit more notice of what is happening over at Tengrela as well, their ground does actually look a lot more prospective than I originally gave them credit for, being just down the road and along strike from Syama (7M oz) across the border in Mali. I know Syama is refractory, so it will be interesting to see how the ore characteristics compare when detailed met testwork begins.... no mention of sulfides so far though.

Again I think Tengrela could grow significantly, Sissingue is really only the first of 9 Au in soil-anomalies to be tested in the project area, and for follow up drilling on a soil anomaly to yield instersections of 142.5m @1.8g/t and 105.5 @1.7g/t is pretty nuts... Looks like they will twin the 142.5m intersection with 2 other DDH's, to follow this result up.

Some width >= 2 g/t would be nice, but this zone may in fact be typified by very broadly anomalous mineralisation around 1.8-2 g/t??? I dunno, need some more drilling lads . I know the way many Oz Au plays have been beaten up this year, they would give their right arms for these kind of grades..lol.

Definitely starting to look the goods now.

jman
 
Trust me Jman for biting the bullet and exciting...only to see a 40% rise

I thought my game plan was intact...gold down...PRU stale...then bam.

I liked the presentation as well, but may have to wait for a pull back if im to get back into Africa.

Well done on holding
 

shame JTLP,

Well it was a bit of a rough road for a while, I was down around 25% in this at one stage so I really just had to hold on. If I had really put my money where my mouth was, I would have loaded up again around 90c, but alas, well....and the rest is history as they say.

I was always reasonably confident of a substansial upgrade at Ayanfuri, it was just a matter of when, and how much. With a TSX listing looming, it will be interesting to see how the Canadians attribute value to quality ounces in the ground comapred to their Aussie counterparts ... I think they see us as "gold snobs" atm mate! Keep looking for that tech pullback, it could potentially stall around 1.50 perhaps.

jman
 
Bit of profit taking during yesterdays session,

Would be good to see some consolidation around 1.45-1.48 as it has run pretty hard recently. Buyers look to have thinned out a bit so, so a slight pulback should be a timely reminder for us to keep our feet on the ground here.

jman
 
Some more DDH assay results out today from Sissingue East,

Pleasantly surprised with the SD010 results, 31m @ 11.3g/t from 69m, PRU are still awaiting assay results for SD016 and SD017 which are twinning the very broad, low-medium grade intersection in SD003.

SD007 and SD008 were not so impressive, which gives the the first inkling that perhaps we can start thinking about constraining this beast to the north? Mineralisation in SD008 in particular seems very deep, with average grades that might struggle to make optimisation (eg 15m @1.1g/t from 158m). We really need to see the assay data for SD013 and 014 to the north first before a proper judgement can be made.

Encouraging to note that that two of the holes which PRU have yet to receive results for contain vg.

jman
 
Report out today by BGF Equities Research (formerly Far East Capital).
A few quotes from it:

"The best new multi-million ounce gold stock"

"When a project starts to get above 4 million ounces, it is
legitimately world class. It comes onto the radar screen of the
world’s largest gold producers who have a voracious appetite"

"You can be certain that there will be a number of companies lining PRU for a
takeover, just as it was predictable that Bolnisi Gold – but this
one is going to be bigger. This is a “no-brainer”! There is no
other gold stock that compares"

"PRU’s Ayanfuri gold project in Ghana is rapidly emerging as
the most significant gold discovery by an Australian company,
over the past three years"

"It appears that the cut-off grade employed is a function of
economics rather than a geological limitation. This means that
as the gold price rises, mining can extend the boundaries of
the orebody and the resource expands, keeping profit margins
constant but expanding the potential cash flow"

"Thus, the cash flow at today’s gold price would be US$66m and
US$84m respectively (43 ¢ and 55 ¢ respectively)" (referring to Ayanfuri)

"In addition to the Ghana projects, PRU is in the early stages
of assessing what appears to be another multi-million ounce
gold opportunity in the Ivory Coast"

"A listing in Toronto, in July, will coincide with a placement of up to $30m"
 
If BGF is selling the PRU to its clients at $1.4 and market held around 1.485 IMO PRU is more to offer.

PRU has been aggressively marketing in Canada and their senior executives have returned from Canada and off to Congo. I am sure BGF will be backing to hold the price as well until it gets listed in TSX at least. Nevertheless fundamentally I think PRU has good prospects and intrinsic value if I have read the drill result and company report correctly.

I believe the Manas (spin off from PRU) is going to be a hot cake and does any know get an idea how to get some priority allotment ?

In january PRU holders got priority allotment.

Would be interested to know comments from others on EV, FV etc on PRU

Regards
 
Bit of a sleeping giant here perhaps?...

PRU continue to aggressively define further mineralised zones at Ayanfuri, which is potentially on the verge of becoming world class.

Some of the better intersections from the AF-Gap and Esuajah South include:

- 77m @4.6 g/t
- 98.7m @3.2 g/t
- 104m @3.9 g/t
- 62m @3.4 g/t

Should be a steady flow of news throughout the remainder of 2008, with a maiden resource for Mampon due, the preliminary feasibility study due to be finished at the end of July, and of course ongoing drilling at Ayanfuri and Tengrela. PRU's target by the end of 2009 is to have 8,000,000oz in resources and 4,000,000oz in reserves, definitely one to go long on in my book.

cheers
jman
 


Jman

If I can add to your comments the drilled resources has been constantly getting better, recent fund by selling $1.4 per share even if it is $1.14 now shows intrinsic value (fund managers would not waste millions of their investors) and SP could depress tomorrow with DJ fall tonight.

I was reading its reports and I personally believe you have nailed it

But I am not an expert and would like stat gurus like YT and Kennas and others if possible could send your comments on your analysis of PRU

Cheers
 

Miner,

There has been some quite aggressive capital raising by PRU this year:

- 3rd March 08: PRU announces it has raised $10.6m from the issue of shares to a large European fund @ $1.06 per share.

- 21st May 08: PRU announces it has raised another $15.6m from the issue of 10,714,286 shares @ 1.40 each to BGF Capital Group and Helmsec Global Capital.

Clearly some institutional buyers with appetite, imo a combination of the negative sentiment towards goldies, implosion of the DOW and tax-loss selling has clearly deprecciated the price here.

Current Corporate Structure:

- Ordinary Shares on Issue: Approx 174M
- Share Price: 1.15
- MC: Approx $200m

Pretty low EV of 42, explorers/juniors with MC to oz of around 30 would be about ballpark, so PRU doesn't look too bad on that basis. If they can actually prove up 8,000,000m oz in resources by the end of 2009, and also 4,000,000m oz in reserves, then this would be a pretty strong case for a drastic re-evaluation. Bear in mind that of the 19 deposits previousy mined at Ayanfuri, only seven have resource numbers, so in all likelihood there is a good chance of achieving this.

Taking a hypothetical scenario at the end of 2009, with 8M oz proved-up:

- Ordinary Shares on Issue: 250M (to allow for further dilution and capital raising)
- Share Price: 1.50
- MC: Approx $375m

Would still give an EV of around 45, for an imminent producer with a potential 180-200Koz p/a operation and a 15+ year mine life. Note that the EV excludes debt, cash and other assets.

Feel free to comment/challenge the numbers

Cheers
jman
 


Thanks Jman

I liked your hypothesis and I would love it should the hypothesis turns out to be fact

I was talking with a senior executive of the company about a month back and he (of course he would say so) said to keep an eye on PRU and Manas both, He was travelling between Canada, Africa frantically. I think by next month they would unravel some good stories and when the price has dwindled down it is time to top it up for me

Fundamentals look like good and I am holding it though the shares have dropped down since I bought

I am sure in couple of weeks there will be many more posts on PRU until then I should sit tight
 
Miner said:
Fundamentals look like good and I am holding it though the shares have dropped down since I bought

I am sure in couple of weeks there will be many more posts on PRU until then I should sit tight
Click to expand...

Well these are indeed troubled times we are living in Miner,

Most goldies looking very volatile atm, and PRU no exception. I may have to seriously look at increasing my holding here, but the volaitility is a little unnerving to say the least.

The recent economic feasibility numbers look good, well in all honesty they looked great, but the $175M capex outlay is definitely something to bear in mind. With regards to this, I wonder if our Canadian friends may not have some part to play here, as we already know they are watching PRU rather closely.

The processing rate of 4.5mpta is about 1mpta greater than what I thought they would be targeting (not a bad thing by any means), and using a pitshell price of US$750/oz we arrive at 1.9Moz of in-pit gold or 2.6Moz using a $850 scenario. It's probably fair to say that the lower cutoff grade of 0.8(?)g/t provides us with a little more flexibility (another bonus), since if the gold price does increase significantly a lot more previous "uneconomic" ounces would fall within the optimized pit design.

Still AUD$20M in the Company kitty thanks to the seemingly well-timed cap raisings earlier this year, more than enough to drive Ayanfuri and Tengrela forward over the next 14-15 months. With a cap payback period of around 2 years, and a gross cash surplus across LOM of US$625M (before tax and deprecciation but after royalties) there will be plenty more to be played out in this story I'm sure.

jman
 
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