Morning investor webinar and conference call. All attendees are in listen-only mode. If you would like to ask a question directly to the company, please use the Raise Hand function within Zoom. For those phoning in, dial star nine. I'll now hand over to Perseus Mining's CEO and Managing Director, Jeff Quartermaine. Thank you, Jeff.
Thanks, Nathan, and welcome to Perseus's webinar to discuss our September 2023 quarterly report. As Nathan said, my name's Jeff Quartermaine, and I am the CEO of Perseus, and as in the past, I'm joined on this call by our CFO, Lee-Anne de Bruin. We'll both be available to answer questions as needed later in the call. Today, we're speaking to you from our Perth office rather than on site, as we have in the past. We've recently completed our quarterly review of our operations, so there's no need for us to apologize in advance for any blackouts or communications issues, as we sometimes need to do at the start of these calls.
The agenda for today's call is that firstly, I'll provide an overview of what Perseus has achieved operationally during the September quarter, and then follow that up with a Q&A session, in which Lee-Anne and I'll be able to address any questions that you may have regarding the quarterly report or indeed, our business in general. I'll keep my presentation as brief as possible, as all the details that you need to understand that Perseus has achieved during the quarter, are fully documented in the market release that was published earlier this morning. But let me highlight a few key points, if I may, and then let's discuss the detail. For those of you who are listening to the call on your computer, you should be able to track my comments visually on the presentation on your screens.
Before I start, though, with the specific results, I might say that the team has delivered yet another strong performance this quarter. Not only in terms of gold production, all-in site costs and cash flow, as you'll hear in a moment, but right across the company. But what's not necessarily obvious from the results, though, is the circumstances under which these results have been achieved. This quarter, rainfall in the parts of West Africa where we operate, has been very, very heavy indeed. A t Sissingué, in particular, where 766 millimeters of rain fell during the period, there was quite a bit of disruption, given where we're actually mining. Notwithstanding this, the Yaouré and the Edikan operations have not only made up the shortfall from Sissingué, but outperformed their respective internal targets, resulting in a very good group performance.
Highlighting the benefits of having multiple mines in our portfolio, and once again, highlighting the resilience and adaptability of our team, that's become quite a hallmark of this company. So without further ado, let's turn to the scoreboard and just see what I'm talking about. So I'll just move on with our cautionary statements that you're familiar with, and look at the, give an overview of the operating results. So, once again, as we say, Perseus has continued with some market-leading performance. We produced 132,804 ounces of gold this quarter, which was down slightly on the record performance of the previous quarter. Our all-in site cost at $937 per ounce, was about $70 an ounce lower than the, the last quarter.
Our average gold sale price achieved was $1,936 an ounce, slightly up on June, which gave us a cash margin of $999 per ounce, which was 8% higher than previously. This translated into cash flow, notional cash flow of $132 million for the quarter, which was slightly up on the previous period, and resulted in us having a cash and bullion balance at the end of the quarter of $594 million, which was $72 million more than the position as at the end of June.
In summary, Perseus is very well positioned to achieve our guidance for the half year, and very firmly on track to fund future growth and to continue capital returns to our shareholders. Now, if we run through each of the mines fairly quickly to see where these results come from. Yaouré was the major contributor, producing about 56% of our total production, or about nearly 74,000 ounces. Production costs were at $568 an ounce, or all-in site costs $677 per ounce. Very low in global terms, but going forward, we are likely to see some upward pressure on the all-in site costs due to increased fuel and mining costs that we expect to see in the current quarter.
65,000 ounces of gold was sold, and the average price for Yaouré was $1,949 an ounce, which gave a cash margin of $1,272 per ounce, which is fairly outstanding, all things considered. In terms of the reconciliation between our block model and mill for the last three months, it was about 20% positive on tons, 8% negative on grade, giving an overall 10% positive on contained ounces, and that's within industry standards. I mean, and certainly reflects the MIK modeling that we use. During the quarter, we did update details of our mineral resource and reserve estimate for the mine, and produced a feasibility study on the CMA underground operation, and that was released to the market in August.
Then we updated our life of mine plan for the entire operation later on in September. So Yaouré has had a very good quarter indeed. Looking at Edikan. Edikan has also had an excellent quarter, and it did about 37% of our total production. Nearly 48,500 ounces of gold produced there, at an all-in site cost of a touch over $1,000 an ounce, which is an exceptionally good performance at Edikan, and certainly better than what we saw from the mine several years ago. Our sales were done at an average price of $1,910 an ounce, and the average margin achieved there was $832 an ounce. Now, this was a really very good result, actually.
The rainfall at Edikan during the quarter was about 500 odd, 501 millimeters, most of which fell during the month of July, which set us back a little, but we were able to reset plans and then to outperform for the last two months of the quarter. Now, the reconciliation between block model and mill at Edikan has been very, very good as well over the last three months. 3% negative on tonnes, but 23% positive on grade, giving a total of 18% positive on contained ounces. Now, that is a little higher than, you know, you'd be totally comfortable with.
Although high is good, obviously, but we'll keep a close eye on things as we go forward, and if this trend is sustained, then we may need to take a look at our model more closely. Now, one thing, post the end of the quarter, I think an important milestone was achieved, and that was when a moratorium was declared over the mine take area for the Nkosuo deposit. This is a discovery that we've made just north of the Edikan mill. That then was declared on the nineteenth of October, and what it means is that we can now commence outstanding actions to bring that deposit into the mine plan, and we're expecting that all preparations will be complete, and we'll be able to start mining at Nkosuo in May next year.
Now, Sissingué, as I said, you know, was severely impacted by rain during the quarter. 766 millimeters of rain fell there, and more than half of that was in the month of August. So it really did play havoc with our production. The total production for the month was only 10,570 ounces of gold, representing about 8% of our production. The costs were very high compared to historical performance at Sissingué, and then that was a direct result of the low ounces of gold that were produced. Also, during the period, our sales were down somewhat.
Each of the sales were done at $1,974 an ounce, but the sales in total were down, impacted by the timing of gold shipments, in part, as a result of weather as well. We did make a modest loss, unfortunately, at Sissingué this month. But the good news is that the shortfall in production and earnings that were occurred in Q1 are expected to be recovered in the current quarter as the weather has abated. We believe that overall production will be in line with our market guidance range of 27,500-32,500 for the half year, with all-in site costs also in the guidance range of $1,700-$1,900 an ounce.
We do expect that there'll be a sharp turnaround this quarter, and already we've seen that in the month of October, as the place has been drying out. Now, one of the things that has been quite, quite notable during the quarter is that we've got very, very positive reconciliation between the block model and mill in the last three months, particularly in the Fimbiasso W est deposit. Now, we had 98% positive on tonnes, 15% positive on grade, so an overall 127% positive on contained ounces.
Now, what this is all about is that, what these, you know, this additional production has come about from is from grade control drilling, which is very much more closely spaced than the wide-space drilling that was used to calculate or to estimate the block model. I t's quite apparent that, in fact, there is a lot more mineralization in the Fimbiasso deposit than we originally envisaged. R ecent investigation indicates that this strong negative in the upper benches is not, you know, something that's going to change going forward.
In fact, we have noticed that, in fact, it continues at depth, and it's going to necessitate a reassessment of the pit, and potentially, a very strong potential exists for us to incrementally extend the life of the of that particular pit and the overall Sissingué operation well beyond the current fiscal 2026 as currently estimated. So while the production has been disappointing at Sissingué during the during the quarter, it's not all bad news, certainly looking forward there. Now, in terms of production, we've guided the market to a total of 242,500-272,500 ounces for that period, all-in site cost $1,080-$1,190.
Now, where we sit, I think that, you know, data up to the twentieth of October, we're well and truly, towards the upper end of that production range, and our costs, as you, you heard, at the end of the September quarter, were well below the bottom end of that, of that cost range. Now, we, we will see a slight increase in cost in this next quarter, but certainly we're going to, we believe, finish the quarter, very, very strongly relative to that guidance range that is already been in the market. So clearly, there's no change to the guidance that we have, have given to the market. Now, pleasingly, this production that's been revealed here has been done in a very sustainable, safe, and sustainable manner.
We have, you know, clear evidence that our Safely Home Every Day, our SHED program, which is a safety program that's been implemented across all sites in conjunction with a fatal risk management exercise, is having benefits, and we're starting to see a decrease in the total recordable injury frequency rate, the TRIFR, relative to the previous quarter. So safety is an absolute priority right across all three sites, and certainly, the investment that we're making in those programs is resonating very well with our staff and having the desired effect. Our work with our host communities is continuing. We're continuing to make a major contribution to the economies of all of our host countries and to be employing large numbers of local and national people.
Ninety-five percent of our workforce across the company is, is, comes from the local host countries, which is clearly very beneficial for those economies and for the people themselves. I'm very pleased to say that during the period, we've had no significant community events. Our relationship, our license to operate is sound, and environmentally, we continue to work in a responsible manner. We've had a very minor increase in Scope 1 and Scope 2 greenhouse gas emissions, but that's more of a rounding error than anything. We've certainly had no significant environmental or tailings stand issues, and, you know, we're managing that part of the business very well.
Now, I mentioned growth before, and that's certainly a question that comes into mind when looking at the company and looking at the size of the balance sheet that we have. We're certainly very engaged in the organic growth side of things, and as I've already said, we've put out some releases during the quarter about the development of the underground operation at our Yaouré mine. In the process of coming up with that, we've extended the life of the mine by 12+ years to 2035. Now, you know, we fully expect it'll go well beyond that as we continue drilling down deep.
But certainly there's been a marked increase in the resources and the reserves around Edikan, around Yaouré, and that operation, you know, the life of that has been well established. So that's been a strong plus in the organic side of things. Certainly the exploration's been encouraging. I mentioned the Nkosuo deposit that we picked up. We've been able to incorporate quite a bit of that lease, that exploration license into where that hosts the Nkosuo deposit into the Nanankaw mining lease. Y ou know, we'll be moving forward on that.
But as to the remainder of the Agyakusu lease itself, exploration license and the DML Agyakusu license and Domenase, there are a number of targets on there that we're pursuing, and we have every confidence that we're going to come up with some further deposits before too much longer as well. So that's looking quite encouraging. In Côte d'Ivoire, most of the exploration activities are focused around Yaouré. Certainly looking at that northern plunge on the CMA underground structure, and that's starting to show some pretty interesting numbers coming through as well. A s I said earlier on, we do expect that, you know, while we've identified 12.5 years there for the moment, that will get a lot larger as we go forward.
We've also run a couple of programs up around Sissingué and identified mineralization that was previously not identified, and then that needs further infill drilling. But we're very confident that those structures will deliver additional tons of ore to go through the mill. Now, they won't be at the same grade as what we used to mine at Sissingué, but they'll be profitable ounces, and will add to the life of Sissingué going forward, which is encouraging. O f course, in Sudan, there's been limited field activity as we have been reestablishing ourselves in country, putting in place security arrangements, which I'll refer to in just a moment.
Speaking of, speaking of it, so people are well aware that that conflict has been taking place in Sudan since April, which necessitated us to pull back from the country and definitely pull back from our potential decision to move into development mode there, as we were planning to do. So what we've basically done is pull back, although we have recently gone back to the country, and we're establishing our security structures with the aim of, as soon as they're in place and to our satisfaction, to recommence, drilling on that site and to just continue to expand the mineral resource and ore reserve until such time as we get comfortable with the country. Now, when that might be, it's very difficult to say because there's no clear path to resolution of the dispute.
But nevertheless, drilling activities will be conducted, and they'll be conducted in a safe manner, and none of our people will be put at risk. So that's, that is for the future. In the meantime, we've been working with our host communities, in particular the Ababda community. We've signed the first of our consultative committee framework agreements there. So we're working with that group, and they're, in fact, participating in the security arrangements that we're putting in place. So Sudan is moving ahead, but albeit at a very different pace than what we contemplated several quarters ago. Now, the other subject, of course, is inorganic growth, and we've made it quite clear that...
I n the short term, we're very, very focused on continuing to produce over 500,000 ounces a year, which we are comfortably doing. But longer term, we're committed to increase the size of our portfolio and to upgrade its size, quality, and geographic distribution. I've mentioned the organic activities that we're pursuing, but in addition to that, we believe that there is very strong growth opportunities through inorganic means as well. We do have a very significant financial capacity, approximately $900 million when you add together our cash balance, plus the undrawn line of debt of $300 million that we have, and we have the human capacity to engage in these activities and to deliver very decent economic returns, you know, for our company.
Provided, of course, that we can strike an acceptable balance of risk and return, which is very, very key in terms of investing on the African continent. Now, we do maintain a very, very active watching brief for opportunities. We do evaluate lots and lots of opportunities, but including both pre-development projects and existing production. I can say quite candidly that identifying opportunities is far more easy to do than identifying economically profitable opportunities. But nevertheless, we do, we do look very closely, and I'm very sure that before too much longer, we will be in a position to expand our portfolio through inorganic means. Now, before I do conclude, let me just say, as I, you know, repeat the point that I made at the start of the call.
This has had a, another very good quarter on all fronts, including gold production, all-in site cost, cash margin, and cash flow generation, indeed, business development. Pleasingly, this work has been conducted in a safe and a sustainable manner, in line with our targeted standards. We have delivered gold production and all-in site costs that have firmly put us on track to comfortably achieve our December half year market guidance, and in keeping intact our record of doing what we say we're going to do, something that is key to the ethics of this particular company. Our all-in site costs continue to be very competitive in global terms, and we're managing our business successfully in tough and tough economic and geopolitical times.
On this score, I do repeat that, you know, the battle to contain our cost base at the current very low levels is challenging, and we expect that in coming periods, there will be some increases in all-in site costs. But in saying that, we do still expect to perform very well relative to our market guidance, and continue to outperform most of our peers. One thing I'd just say is, having, you know, since the last webinar, I've met with a lot of our investors, and there are a couple of points that they have raised repeatedly with me that I should mention on this call. Now, one of those is the size of our significant cash balance and what we plan to do with this.
I've already made reference to that, and I repeat the point: we do intend to continue to grow our company, as and when value-accretive opportunities arise. W hen that occurs, we won't hesitate to deploy capital accordingly. In addition, in the immediate future, we will continue with our existing capital management strategy of declaring a base dividend, supplemented by a bonus dividend or potential share buyback or capital return, depending on the level of excess cash available when that dividend is declared. But that is certainly part of our business and will continue into the future. I n those circumstances, at least while Lee-Anne and I are at the helm of Perseus, we're wasting our shareholders' hard-earned money on poor investments, and of that you can be absolutely sure.
I know that that is something that some investors are concerned about, that we will feel compelled to spend when it's... even if the opportunities aren't great.N I can assure you that will not happen. The second question that's been raised by many investors relates to the geopolitical risk associated with our business. Given the stream of negative publicity arising from a series of coups d'état in the, in various parts of Sub-Saharan region of Africa, where we do not operate, I should say. As you know, Perseus' operating mines are located in Ghana and Côte d'Ivoire, arguably the most stable jurisdictions in West Africa. Now, unlike the neighbors of Mali, Burkina Faso, and Guinea, the politics of Ghana and CDI, Côte d'Ivoire, are relatively stable.
That's not to say that Ghana does not have economic challenges at the current time, nor to deny that Côte d'Ivoire experienced a civil war over a decade ago. But in current day terms, by comparison to other jurisdictions, Côte d'Ivoire and Ghana are by far the most stable and preferred investment destinations in the region. The point of this is that Perseus has deliberately established a geopolitically diverse, diversified portfolio to accommodate these political cycles of its host countries, and the inherent level of geopolitical risk associated with Perseus is significantly lower than that of its peers, who offer either single country exposure or exposure to some very high-risk jurisdictions in Sub-Saharan Africa.
Now, as a consequence of that, I would argue that the discount that the market applies to Perseus, attributed to its African exposure, is significantly mispriced, which in itself creates an opportunity for astute investors. Now, finally, in conclusion, I want to acknowledge, as I have done in the past, the contribution that's been made to the success of Perseus over many years, but in particular, the last three months, by all of the men and women who work for Perseus in the four countries in which we operate, making up both our management and operating teams. You continue to do an outstanding job, and I sincerely thank you all on behalf of shareholders for your great efforts and in continuing to deliver on our promises. I know that quite a number of our people would be on this call today.
So thank you very much, everyone, for your attention. This brings my presentation to a close, and now Lee-Anne and I are happy to take any questions that you may have. Over to you.
Thanks, Jeff. If you would like to ask a question directly to the company, please use the Raise Hand function within Zoom. Okay, your first question comes from Reg Spencer at Canaccord. Thank you, Reg.
Thanks, Nathan. Morning, Jeff. Congratulations on a very good quarter. Maybe just an observational question on the macro. A couple of quarters ago, we started to see some evidence of some cost inflation. How is that tracking from what you guys can see on the ground? Labor rates, fuel, et cetera, et cetera.
Okay, labor rates, for instance, are, you know, they're in line with what we would see everywhere. In fact, if anything, they're possibly, arguably slightly lower than you would see in Australia. Fuel has been interesting because up until very recently... Well, we experienced some inflation in fuel in Ghana, but the fuel price in Côte d'Ivoire was controlled by the government. But I think that control has come off during the course of this month, actually, and we have seen an increase in fuel costs, which will flow through to the bottom line. I think where we are also likely to see some costs, as in our mining costs, where our contractors are exposed to normal inflationary processes through on tires, spare parts, et cetera, et cetera.
So, you know, there will be some increases on there. But generally speaking, we're not seeing massive cost inflation. We do work very hard at keeping them under control. We have continuous improvement programs running at all three sites, where we look for opportunities to take costs out of our business. Now, obviously, as you continue to do that, it becomes more challenging to find new areas to reduce your cost base, but that's the challenge for us, and that's a challenge that's very happily accepted by our team.
Excellent. Jeff, you mentioned before capital management and how that might sit relative to your desire and needs to look at further external growth opportunities. Is that a timing issue? Like, if you can't find a good enough asset in, say, two years or three years, you know, because if we look at our own forecast on cash flow, you might have as much cash equal to your market cap in about three years' time.
Well, no, Reg, we'd like our market cap to go up, if you don't mind. Thanks very much.
Well, well, let's say, let's... Okay. But, is there a time limit that you would want to see before you would look at a buyback or a major special dividend or huge capital return to shareholders? Or, that's just gonna be an ongoing process, and you're going to continue to preserve that cash until such opportunity presents itself?
Well, look, every six months, when we declare our financial results, we look at this particular question and we examine the situation on its merits. I mean. What gets taken into account is the opportunities that sit before us and how likely they are to be realized. I mean, we don't want to leave ourselves in a position where we can't achieve our growth targets, because we've given all the money back to shareholders. But having said that, we also don't want money sitting there on the balance sheet doing nothing indefinitely. So look, it's going to be a situation that we evaluate on a regular basis. Y ou know, I think shareholders can trust us to make appropriate decisions when the time comes.
Great. Thanks very much, Jeff. Appreciate it.
Thanks, Reg.
Thank you. Your next question comes from Alex at Citi. Thank you. Go ahead, Alex.
Hi, Jeff. If I look at the group exploration spend, stripping out Meyas Sand, September quarter looks like one of the lightest quarters for some time. Is this a function of weather over the quarter?
Yeah.
And for the exploration... Sorry, go ahead.
Yeah. No, it is. It was very wet. You know, you can't get out and about, you know, into the field when, when things are saturated like that. So, there wasn't a huge amount of field work during the quarter.
Okay. I n terms of the explorations, programs that you outlined, is there any particular program that you think is more promising in terms of ounces growth?
We'd like to think that they're all promising, my friend. But look, I mean, I think, you know, we do expect to see some good outcomes in Edikan from those programs there. O f course, the work around Yaouré is, you know, very distinct, actually. That is adding ounces. Now, that'll sort of slow up a little at Yaouré until we get underground, and then we'll be drilling from the underground platform rather than from surface. So, there will be a slight hiatus at Yaouré in terms of adding ounces. But we do expect that once we get underground and can do exploration more cost effectively, then, you know, we will see those ounces come back. Sissingué is the interesting one, though.
I mean, you know, I don't think, you know, we're going to turn Sissingué into a Tier 1 or even a Tier 2 asset, but we do see opportunity there to add several more years to the mine life. It won't be massively, you know, low grade ounces—sorry, high grade ounces, we don't think, based on what we can see. But certainly, you know, what we've done at Sissingué is agreed amongst ourselves that we're targeting to extend the mine life to five years from now, just as at Edikan, internally, while I was there last week, we agreed that the target we would set ourselves was to increase the life of mine by 10 years.
So we do have these internal targets that we're going to pursue, and we wouldn't establish those targets if we didn't think we could achieve them. Now, it remains, you know, the work remains to be done, and it may prove that that's beyond us, but we are optimistic right across the board that we will deliver those outcomes. Now, the other thing I should say is that we're also looking at bringing in some greenfield opportunities into the business as well. S tarting to take a longer-term view around organic growth in areas away from existing infrastructure.
Now, we'll need to await the completion of some of those things before we can talk publicly, but certainly we have some very interesting opportunities ahead of us to expand our footprint in an exploration sense, more broadly across the African continent. But this is one of these things that we'll announce in due course.
Great! Thanks. That's it for me.
Thank you.
Thank you. There are no further questions at this time, so I'll hand back to Jeff for closing remarks.
Okay. Well, look, thank you very much, and Lee-Anne's very grateful that she got off lightly today. But, nevertheless, thanks very much for your attention, everybody, and we look forward to bringing you further good news as the year unfolds. Thank you.