Interview with Jeff Quartermaine, Chairman & CEO of Perseus Mining Ltd.
Our previous interview: https://www.cruxinvestor.com/posts/perseus-mining-asxpru-african-gold-producer-poised-for-growth-amid-industry-challenges-5984
Recording date: 23rd October 2024
Perseus Mining continues to demonstrate strong operational execution while building a sustainable growth pipeline in Africa. The company's latest quarterly results show production of 121,000 ounces of gold at all-in costs of $1,200 per ounce, generating significant operating cash flow of $127 million and maintaining a robust cash balance of $643 million.
The company operates three producing mines. Their flagship Yaouré mine in Côte d'Ivoire boasts a minimum 12-year mine life with further extension potential through underground development. While the Edikan and Sissingué mines currently show shorter mine lives of 3-4 years, management has a clear strategy to maintain production through satellite deposits and regional exploration.
Notably, Perseus is advancing the Nyanzaga project in Tanzania, scheduled to commence production in January 2027. This development is expected to produce 200-250,000 ounces annually in its initial years, effectively replacing production from maturing assets. The final investment decision is anticipated by year-end 2024, with construction starting in January 2025.
CEO Jeff Quartermaine emphasizes the company's risk management approach through geographic diversification: "Having all of your assets or investments in one country is quite a risky thing to do. We're presenting to the market a diversified portfolio that's been consistently strong now over quite a number of years."
The company's financial position is particularly strong, supporting both growth initiatives and shareholder returns. Perseus has implemented a comprehensive capital return policy including a base 1% dividend yield plus potential bonus dividends (currently 5 cents per share total) and a $100 million share buyback program. From a valuation perspective, Perseus trades at a P/E ratio of approximately 7.6x, representing a significant discount to both Australian peers (15-16x) and other African operators. This valuation gap may present an opportunity for investors, particularly given the company's consistent operational execution and clear growth pathway.
Several near-term catalysts could drive value:
Nyanzaga project final investment decision (end of 2024)
Potential underground development at Yaori
Exploration success at existing operations
M&A opportunities, including potential developments from their recent Predictive Discovery investment
The investment case is strengthened by Perseus's track record of delivery and focus on building a sustainable production profile targeting 500,000 ounces annually. Their strong balance sheet provides flexibility for both growth investments and shareholder returns, while their multi-jurisdiction approach helps mitigate country-specific risks.
For investors seeking exposure to the gold sector, Perseus offers a compelling combination of current production, growth potential, and shareholder returns, trading at a notable discount to peers despite consistent operational execution. The company's strong cash generation and clear development pipeline provide multiple pathways for potential value creation, while their geographic diversification strategy helps manage jurisdictional risks inherent in African mining operations.
View Perseus Mining's company profile: https://www.cruxinvestor.com/companies/perseus-mining
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What is Company Interviews?
An insight into junior mining and opportunities to invest.
Company Interviews, a Crux Investor show, exists to cut through the jargon, bias and bluster.
Matthew Gordon, and guest host Merlin Marr-Johnson hone in on the important factors that indicate a company's strong footing for growth and success.