I'll now hand over to Perseus Mining Managing Director and CEO, Craig Jones. Thank you, Craig.
Yeah, thanks, Nathan, and welcome to the Perseus Mining quarterly webinar to discuss our December quarterly report. I'm joined here today by Lee-Anne, our CFO. Let me start by acknowledging the tragic loss of two employees of our haulage contractor, Benkadi, who work at our Bagoué mine, and they were involved in a tragic off-site vehicle accident two weeks ago. These deaths have been incredibly sad for the team at Perseus, and particularly our Sissingué operations, and we've been supporting the families of both individuals, as well as the entire team at Sissingué since the accident occurred, and will continue to do so in this very difficult time. We've commenced an internal investigation into the accident and are cooperating fully with the relevant Ivorian authorities to ensure appropriate processes are followed.
Nothing is more important to Perseus than the safety and well-being of the people that work for us and with us, and this remains our highest priority across the group. We are committed to the rigorous application and oversight of our safety systems and to ensuring that all employees and contractors carry their work in a safe and responsible manner. This tragic loss reinforces the need for constant vigilance in all aspects of our work, including travel associated with remote operations. As we turn to our operations through the December quarter, our performance reflected a period where all of our sites transitioned into new mining areas. Transitioning to new mining fronts introduces new complexities to mining operations, and despite this, we delivered a strong operational result and continued to generate robust cash flows, at the same time as making meaningful progress on our growth initiatives.
Our gold production for the quarter was 88,888 oz, at an all-in-site cost of $1,800 per oz. The increase in our all-in-site cost to $1,800 per oz versus Q1 FY 2026 is primarily driven by higher royalties linked to the increased gold price achieved during the period, and an additional 2% royalty paid on revenue at Côte d'Ivoire. The payment of the additional 2% was done in good faith as part of ongoing negotiations between the mining industry and the government of Côte d'Ivoire in relation to formalizing a revised fiscal arrangement, which takes into account fair and equitable distribution of profits in the current high gold price environment.
A total of $20 million was paid in FY 2026 Q2 in relation to the additional royalty, of which $4 million related to the current December quarter, $5 million related to September quarter, and $11 million related to H2 of FY 2025. So just to reiterate, the Q2 FY 2026 all-in site cost in this report only includes the additional royalty paid in this quarter. Combined gold sales from all three operations totaled 86,607 oz, sold at an average sale price of $3,437 per oz, delivering a robust cash margin of $1,637 per oz, capitalizing on strong market conditions.
The notional cash flow for the quarter was $145 million, with the quarter ending with a net cash and bullion of $755 million. For the December half, the group produced 188,841 ounces of gold at an all-in site cost of $1,649 per ounce, and an average gold sale price of $3,241 per oz, generating a notional cash flow of $301 million. Yaouré produced just over 32,000 oz of gold for the quarter, which was down 42% on the previous quarter.
The quarter-on-quarter decrease in production is primarily due to lower mill head grade, resulting from higher reliance on lower grade stockpile material than planned, along with the planned transition in ore sources from the CMA open pit to the Yaouré open pit. The implementation of improved grade control practices at Yaouré, along with higher strip ratios during the period, resulted in lower direct mill feed from the Yaouré pit and the need to supplement lower grade stockpiles in greater proportions. The grade control process is now well established at Yaouré, and mining rates have substantially improved, resulting in increased direct feed of Yaouré open pit ore. This, along with the addition of higher grade, the higher grade CMA underground in half two, is expected to result in higher grade mill feed.
Production cost for the quarter was $1,574 per oz at an all-in-site cost of $2,092 per oz. The jump in all-in-site cost versus Q1 was driven primarily or predominantly by lower gold production, resulting in higher fixed costs per ounce, as well as higher royalties and timing-related increase in sustaining capital as a result of the timing of the life of mine tailings pipeline relocation. We sold 34,000 oz of gold from Yaouré at a weighted average sale price of $3,243 per ounce, which delivered an average cash margin of $1,151 per ounce.
Notional operating cash generated by Yaouré for the quarter was $37 million. Reconciliation between the block model and the mill for the last three months is 20% positive on tons and 11% negative on grade, for a 13% increase in contained gold ounces. This continues the trend from the previous quarter, with higher mine tonnage offsetting lower grades though the overall metal reconciliation is slightly improved. The upper levels of the Yaouré open pit is continuing to yield more gold as grade control drilling extends mineralized structures. Edikan delivered a strong quarter, with 38,000 oz of gold produced at an increase of nearly 17% on the previous quarter.
Production cost for the quarter was $1,097 per ounce, and an all-in site cost of $1,535 per ounce, which was down 4% on the previous quarter. We sold 37,000 oz of gold from Edikan at a weighted average sale price of $2,700 per ounce, resulting in an average cash margin of $2,165 per ounce and notional operating cash generation of $83 million. Mill time and recovery were 89% and 87% respectively, largely in line with the targeted key performance indicators.
Reconciliation between the block model and the mill for the last three months is 9% positive on tons and 3% negative on grade, for a 5% increase in contained ounce or ounces, which is a substantial improvement on last quarter. This improvement in operating outcomes for the quarter is largely due to full mining access being available at the Nkosuo pit, allowing the mining sequence to be restored and improving mining conditions. Edikan's gold production is expected to continue to increase over the next two quarters as grade from Nkosuo continues to climb. Plan to mine cutbacks of Fetish and Esuajah North pits are currently progressing, with applications submitted to the relevant regulators for approval to commence mining in both areas.
During the quarter, the Sissingué Complex produced 18,000 oz of gold, which was up nearly 60% on the September quarter. The Sissingué Complex results are attributed to mining and processing operations at Sissingué Gold Mine, together with satellite mining operations comprising of the Fimbiasso Gold Mine, located approximately 65 km from Sissingué processing facilities, and the newly developed Bagoué Gold Project, located approximately 137 km from Sissingué processing facilities. Both the Fimbiasso and Airport West pits were completed during the quarter, and ore is now being sourced from the Sissingué main pit and the Bagoué and Antoinette deposit. Mining at Bagoué commenced during the quarter at the Antoinette deposit, following the completion of the Fimbiasso operations.
Production cost was $1,545 per ounce, and an all-in site cost was $1,844 per ounce. The improvement in the all-in site cost is largely driven by, driven following the introduction of the higher grade ore from the Bagoué Gold Project, partially offset by higher royalties, resulting from higher realized gold prices and the additional royalty payment to the, government of Côte d'Ivoire, as described earlier. We sold 14,000 oz of gold from Sissingué at a weighted average sale price of $3,227 per ounce, resulting in an average cash margin of $1,383 per ounce, and a notional operating cash of $25 million for the quarter.
Mill runtime improved to 97% from the previous quarter, 91%, the previous quarter is 91%, and gold recovery was steady at 89.5%. Reconciliation between the block model and the mill for the last three months is 18% positive on tons and 17% negative on grade, for a 2% reduction in contained ounces. The lower grade performance is the result of mining narrow, variably mineralized structures at Sissingué main, Fimbiasso West, and Airport West pits, with higher than anticipated dilution in several benches. Operational controls, including blast design, refinement, and improvement, or improved ore mining control initiatives, remain in place to minimize dilution and maintain alignment between the model and mill outcomes going forward.
As mining is now focused on the Antoinette pit at Bagoué and the Sissingué main pit as the primary mill feed sources, mill feed grade is expected to increase for the remainder of the year with the introduction of the higher grade ore from Antoinette. Looking ahead, for FY 2026, our production guidance remains unchanged. Group gold production in the range of 400,000 oz-440,000 oz, with production weighted to the second half of the year. The group all-in site cost guidance range has increased from $1,460-$1,620 per ounce to $1,600-$1,760 per ounce. The group AI, all-in-site cost increase in guidance has been updated to reflect increased gold price assumptions and the resultant increase in royalty costs.
We have also allowed for the 2% royalty increase in Côte d'Ivoire for Yaouré and Sissingué, while we discuss fiscal arrangements with the Ivorian government that result in fair and equitable distribution of mining proceeds at these unprecedented gold prices. As we've discussed previously, our gold production is weighted to H2 of FY 2026, with the inclusion of the new higher grade ore sources at Edikan and Sissingué that are included as part of our mine plan. However, due to the performance of Yaouré in Q2 FY 2026, it is expected that Yaouré will produce in the lower half of its guidance. Before I hand over to Lee-Anne, I just want to briefly discuss growth.
During the quarter, we progressed our organic growth strategy, which focuses on resource to reserve conversion at our existing mines, brownfields exploration, and development of greenfields exploration portfolio. We're progressing our update to our mineral reserve estimates for our existing mines, with an updated estimate for Nyanzaga anticipated in quarter three of FY 2026, so the March quarter, followed by an update to Yaouré towards the end of the financial year. Edikan will follow towards December 2026. These updated estimates are focused on extension of mine life of our existing assets. From an inorganic growth perspective, Perseus progressed an offer to acquire the remaining shares of Predictive Discovery during the quarter. Perseus first acquired a stake in Predictive in August 2024, for a total investment of just under AUD 90 million.
Initially securing a 19.9% stake in the gold explorer and were later diluted down to 17.9%. We, we remain as Predictive's largest shareholders. This has been a great investment, and at current share prices, the investment is now valued at more than AUD 400 million, more than four times what we paid for it. Our decision to make an offer to acquire the remaining shares of Predictive was supported by our knowledge of the asset and Perseus's strategy to build a superior portfolio of African gold assets. At the end of the day, Robex revised matching offer for Predictive was ultimately deemed superior by Predictive's board and resulted in the rejection of our offer. While at this stage we have no plans to revise our position on Predictive, we will continue to monitor, monitor the market conditions.
In terms of organic inorganic growth, we're constantly assessing the best ways to execute our growth strategy and provide best value outcomes for our shareholders. Now I'll pass over to Lee-Anne to speak on some of the financial aspects.
Thanks very much, Craig, and hello, everyone, and Happy New Year. I'm not sure if it's too late to be doing that. The quarter delivered a very strong closing cash and bullion balance of $755 million, which was down $82 million on the previous quarter. This is built up as a result of a contribution from our operating margin of $132 million. We continued to invest strongly in our capital investment programs. About $60 million went into that, which included development capital for the Nyanzaga Gold Project of about $28 million and the CMA underground of about $14 million during the quarter. We will continue to make contributions to our host governments, with $13 million paid in taxes during the quarter.
Perseus's balance sheet remains strong, with increased liquidity. We're looking forward to further strong forecast cash flows through the fiscal year. We also, as we would have seen in December, announced that we refinanced and upsized the debt facility, replacing the existing $300 million facility. The amended facility has been increased to $400 million, plus a $100 million accordion option. It has a 3-year term, plus an option to extend for 2 years, so this takes it out to 2031. We achieved very competitive pricing through strong demand, resulting in a total margin reduction of 125 basis points from the existing facility. Amendments were made to provide Perseus with more flexibility across a range of terms, including our financial covenants, and this really reflected the continued enhancement of Perseus's credit profile.
I'd like to thank Nedbank and Citi for their assistance and all the banks that have come on board through the process and our continued support of our financiers. Shifting our head to hedging. In this current rising gold price environment, Perseus has continued to ensure the hedging strategy evolves, ensuring we remain refocused on measured downside protection, while always maintaining as much upside opportunity as possible. During the quarter, we further reduced the committed hedging position from 14%- 11% of our three-year production, rolling off a large number of the fixed forward contracts. We continue to protect against the downside with.
This is obviously to ensure that as we make investment decisions for all life of mine extensions across all our operations, we have some level of downside protection, and we have about 215,000 put options, which are all uncommitted, in place at an average price of $2,619 per ounce. As always, we provide for clarity, reconciliation between the all-in site cost used by Perseus to the all-in sustaining cost metric, with the key variances relating to produced versus gold sold as the denominator and corporate administration costs. The average all-in site cost for the quarter, as Craig has mentioned, was $1,800 per ounce, which is higher than the Q1 FY 2026 restated all-in site cost of $1,516.
This increase in the all-in, in this quarter-on-quarter is largely attributable, as Craig spoke to, is to the higher royalties driven by increased gold price achieved during the quarter and the additional 2% royalties paid on revenue in Côte d'Ivoire. The additional 2% was paid to the government of Côte d'Ivoire, despite our stability, our stability afforded to Yaouré and Sissingué under the Sissingué conventions. Agreement was reached with the government to pay the additional 2% for FY 2025 in good faith as part of our ongoing negotiations between the mining industry and the government of Côte d'Ivoire, and in relation to formalising the revised fiscal arrangement, which takes into account fair and equitable distribution of profits in the current high gold price environment.
We'll update you as we go through that, but we, you know, we're appreciative of the nature and the style in which we're engaging with the Ivorian government and with which the industry is working collectively together to get an outcome that works for both industry and the Ivorian government. I'll now hand over to Craig.
Thanks, Lee-Anne. And then we'll move on to our organic growth projects, and we'll start with Nyanzaga. So Nyanzaga remains on budget and schedule, with first gold anticipated in January 2027. Construction activities on site continued during the quarter, with several key work fronts achieving significant progress. A total of $262 million has been committed up to the end of December, which is half of the approved budget. And of the $262 million, $161 million has been incurred. The resettlement housing project is closing in on completion, with the final 10 homes expected to be delivered before the end of January. Fabrication of the SAG and ball mill continued during the quarter, the construction and installation of which are on the current project schedule, critical path, and are progressing well ahead of schedule.
The camp construction progressed to 70% complete, with 32 senior rooms occupied and a further 32 rooms expected to be handed over by the end of January. The tailings storage facility remains ahead of schedule with clearing and topsoil removal. Detailed design is complete, and procurement is well advanced. Importantly, the pre-strip activities for the Tusker deposit have commenced. At our CMA underground development at Yaouré, Q2 FY 2026 saw strong progress, with all four declines under development and a total of 800m of development achieved to date. We achieved a major milestone this month with, this is in January, with the first ore mined from the Bleeker portal . First ore was achieved through development mining, and the stoping operations are anticipated to commence in Q4 of FY 2026.
Project development is progressing to plan, with $44.8 million incurred up until the end of December 2025, and commercial production remains scheduled to be reached in Q3 FY 2027. The CMA underground total, total development capital has increased by $9 million from the approved $172 million to $181 million, due to the requirement for remediation of the eastern wall in the CMA pit to mitigate access risks, from ground instability. Alongside our financial and operating performance, Perseus continues to deliver tangible value to our host communities and governments, and this slide captures the breadth of our contribution. In the quarter, our total economic contribution reached $269 million across our host countries, and this included $167 million in local procurement, which directly supports national supply chains and local business development.
We also contributed $85 million in taxes and royalties and $1.5 million in community contributions as we continue to support local development funds and key community initiatives. Our workforce is overwhelmingly comes from the regions in which we operate, with 95% of employees coming from our host countries. This is a reflection of our commitment to building local capability and building the skills base that our future growth depends on. Although our safety indicators reflect very strong safety performance, with a TRIFR of 0.383 and an LTIFR of 0 up until the end of December, the reality is that the true safety performance is ultimately reflected in human outcomes, not statistics, and our recent fatalities at Sissingué are a testament to this.
Sustainability is at the core of our purpose and guides how we deliver results, creating value, and building resilience, and that's what makes Perseus a trusted partner in achieving its mission of creating material benefits for all stakeholders in fair and equitable proportions. Before I hand over to any questions, I want to acknowledge the hard work and commitment from our teams across the business. The quarter reflected a challenging period as all of our sites transitioned to new primary ore sources.
The teams completed this challenge at the same time as continuing to improve operating practices and discipline. Despite this, we continued to deliver a solid operating performance, generate strong financial returns, and progress our strategic growth projects, all while maintaining high sustainability standards. With a strong balance sheet, high-margin operations, and a clear growth path, we believe we're well positioned to continue delivering long-term value for our stakeholders and shareholders. Thank you, all. Now I'll open the floor up to questions.
Thank you. Just a reminder, if you would like to ask a question to the company, please use the Raise Hand function within Zoom. Your first question comes from Richard Knights at Barrenjoey. Please go ahead, Richard.
Hi, Craig. Hi, Lee-Anne. Thanks, thanks for the call. Just on Yaouré, can you give us a feeling as if, a re you still feeding the plant with stockpiled ore, or are you now getting all the ore from the ore pit? How should we, you know, how should we think about the grade going forward over the next sort of six months to end the year?
Yeah. So we're predominantly feeding X pit ore moving forward for the rest of the year. So, a lot of that dependence on stockpile is behind us.
Okay. Can you perhaps be a little bit more explicit with that in terms of a grade range or-
So if you look at, I mean, the Yaouré grade, I think is in our mineral reserve estimate, so that'll give you an indication on grade from Yaouré. And then, obviously in the second half, we're starting to bring in the CMA underground ore. And with the stoping, so the bulk of the ore really in that fourth quarter is when you'd expect to see the bulk of the underground ore starting to be delivered.
Okay, thanks. And maybe just one on the new fiscal regime in Côte d'Ivoire. Can you give us an indication about the kinds of things being discussed? Is it just an increase in royalty rates, or are there other elements being discussed as well?
So I think, yeah, I mean, with gold prices the way they are, obviously, you know, governments are looking to maximize their sort of recovery of revenues as a result of, you know, high gold prices. So we're discussing just general taxation and how governments take their share of proceeds from the operations. So basically, we're having broad conversations at this point in time on that. The reason we decided to pay the royalty in good faith is we wanted to be having a productive conversation on how to best achieve the desired outcomes of both ourselves and the government, and we didn't want to be talking about penalties and, you know, all these other things. So that's why we took the decision to do what we did. The conversation is productive and proactive between industry more broadly and the government, and we're continuing to have those conversations.
Yeah. And do you have a feeling in terms of the sort of timeframe for, you know, finalising the new fiscal regime?
No, not really. I think these things are, you know, they're complex conversations and could take a little while.
Yeah, I mean, the Ivorian government is obviously formalizing a new mining code, which is, you know, understood. So, you know, they are wanting to finalize it before they release the new mining code so that they can capture it in that. I think just importantly, you know, it is important for you, for us just to emphasize, we do have stability agreements. But, you know, we do understand the government's position that in these high gold prices, they don't necessarily have the structures in place that, you know, they feel can give them equitable share.
To answer your original question, just in terms of are we only talking about royalty, I think we're trying to steer the government to other mechanisms, like increases in corporate income tax, you know, and other things that we think are sort of more effective, in distribution of profits. But, you know, it's been a very collaborative engagement, and I probably, you know, in my history in mining, I don't think I've ever seen the industry working so well together, as we have been in Côte d'Ivoire. So we are looking forward to getting an outcome that's, you know, that's supportive for both the government and industry and ongoing investment in Ivory Coast.
Yeah. Okay. Is there any risk that it could be retrospective in nature?
No, I mean, I think just as a bit of background, remember last year, the Ivorian government implemented this 2% additional royalty into the Finance Act, which doesn't apply to companies that have stability agreements. So effectively, the only way it's gonna be applicable is in that we've paid the FY 2025 with them in good faith and as part of negotiations, given that the average gold price for the year was about $3,500 an ounce last year.
Spot price. Remembering that in Ivory Coast, you pay royalty on spot price, not on sales price. So there's very, very low likelihood that it's gonna be retrospective. The Ivorian government are, in my experience, you know, they do understand investments, and they have got a lot of projects ongoing and being developed in Ivory Coast, that any sort of retrospective change would be pretty detrimental to those projects.
Okay, brilliant. Thanks, guys. Cheers.
Thanks, Richie.
Thank you. Your next question comes from Levi Spry at UBS. Please go ahead, Levi.
Good day. Thanks, Nath. Yeah. Hi, everyone. Thanks for your time. Can we just follow up on the royalty piece? So maybe just a refresher or around the grounds on what, what, what rate is included in, in your cost guidance, across the three sites and the one development site.
So, if I'm hopefully I'll answer your question correctly. That, so just to backtrack, so the royalty that was included in the $1,800 that's been reported, for example, includes only the 2% relative to that quarter. So if you're talking about the December quarter, we've got, we've included that. In terms of the guidance, similarly, we have guided conservatively, 'cause we don't actually know the outcome of this, but we've included the 2% royalty in the guidance that would apply to the period. So it would apply from first of July 2025 to thirtieth of June 2026. We have included a 2% royalty assumption for that period. We have not included in that what we paid for Q3 and Q4 of FY 2025. Does that make sense?
I think so, but can I just confirm the absolute number that you're paying, you know, you're budgeting to pay in Ghana, in Côte d'Ivoire, and then Tanzania?
Oh, so, well, we have the Ghana royalty is the 5% that we, a nd plus the 3% GSL. So we've got so they've got a 5% royalty, and then something that they call a global sustainability levy, which is 3%, so we're paying a total of 8% in Ghana.
Yep.
Then in Ivory Coast. Now, Ivory Coast has got a scaled royalty, but at current gold prices, you're gonna pay, we've assumed 6% plus a 2% additional royalty, in across all of the sites in Ivory Coast.
Yep, got it. Thank you.
No worries.
And maybe just moving to PDI. So like, can you just flesh out, you know, intentions now and the potential to recycle that capital going forward?
Well, we have no plans at this point in time with PDI, so we'll just continue to watch and monitor how that develops. In terms of our position in PDI, there's been no decision on any changes to that position. So, I mean, we've, it's been a pretty good investment for us, so we'll continue to sit on this, on that at this stage.
Okay. Thank you. And then just Nyanzaga, you know, obviously big value driver, key project. Just a bit more detail around next steps as we, you know, think about, you know, first production only 12 months away. Yep.
Yeah, I think we'll obviously continue to work through the construction phase. So it's really moving into tank erection now. Steel erection will be starting shortly. But, you know, the concrete's progressing well. We've, you know, the bulk earthworks are predominantly done, and it's really now start to pre-strip and get ready for ore presentation and commissioning in the back end of the year.
Just, you probably mentioned it, but just confirming critical path sort of type items?
Yeah, mainly through the mills.
Okay. Yep. Good one. Thank you. Thanks for your time.
No worries.
Thanks, Craig.
Thank you. Your next question comes from David Radclyffe at Global Mining Research. Please go ahead, David. Please go ahead, David. Okay, looks like there's some mic issues there. There are no further questions at this time, so I'll now hand back to Craig for closing remarks.
Okay. Thanks, Nathan. Well, you know, as I said, at the end of my presentation, it's, you know, I really do want to acknowledge the hard work and effort by the, the teams in Perseus. I think they're what make the business tick, and, you know, it was a, it was a challenging quarter as we went through quite a lot of change in the business and, and they performed well, and, and to get through that process, and we're, we're really looking forward to delivering the, the, the second half of this year. And, and continue to, to build on the, the value that we've created as an organization and progress our, our, growth projects towards, towards commissioning and ultimately production.