Thank you very much, and welcome to this conference call to talk about Perseus Mining's September 2019 quarterly report that we released to the market earlier this morning. For those of you who have not had an opportunity to read the September quarter report as yet, let me summarize it for you in a couple of paragraphs. We can then dive into some detail and follow up with questions. So firstly, this quarter, Perseus's two West African operations at Edikan and Sissingué continue to perform very strongly and on plan, producing a total of 65,825 ounces of gold at a weighted average all-in sustaining cost of $922 an ounce. Now, this is the 11th consecutive quarter in which our operations have performed this way. A clear consistency has developed in our production levels, and pleasingly, the trend of declining costs that were set in train some time ago is continuing.
Production for the quarter was, in fact, up by 2.7% on the previous quarter, and our All-In Sustaining Costs were down by 6.8% relative to the previous quarter. We are once again on track to deliver on our half-yearly production and cost guidance to the market, so no changes are required there. Our strategy for value creation through developing mineral resources rather than trading dollars and buying existing operations at full prices continues to deliver the goods for us. The development of Yaouré, our third mine, is now well underway. It's on time and on budget, and the potential for extending the reserve inventory and therefore the mine life at Yaouré, which currently sits at about eight and a half years, is excellent.
And finally, once again, Perseus has passed the lie detector test, and you might wonder what I'm talking about there, but I am, of course, referring to the growth of cash in our balance sheet. Now, unlike some of our peers, our reported all-in sustaining costs is an accurate guide to the cash that it takes to make each ounce of gold and therefore the cash flow that we generate. And this quarter, we generated notional cash flow of $29.8 million US dollars, which was up about 55% on the June quarter. And obviously, the fact that we invested nearly $16 million in the development of the Yaouré project, paid for the establishment of our new debt facility, paid income tax to the Ghanaian government, etc., our cash and bullion balance at the end of September was $120.6 million US dollars, slightly higher than it was at the end of June.
This quarter has once again been both financially and operationally strong, and it's been a very good quarter for the company and very satisfying from management's point of view. As we continue to deliver on our promises and do what we say we're going to do, which is, of course, one of the core values of our company. Let's turn to the report itself and talk with a bit more granularity about what has actually been achieved. Looking first at the operations, as I said, across both the operations, we produced a combined total of 65,825 ounces, and that included 44,088 ounces from Edikan and 21,737 ounces from Sissingué. That's about 2.7% more gold than the previous quarter and in line with our internal expectations.
If we look forward to production over the full half-year period to 31 December, which is the period we've given guidance for, given that we've produced 65,825 ounces this quarter, we're well on track to come within the production guidance range of 120,000-140,000 ounces for the half-year. In fact, we should do fairly well in terms of that range. Now, looking more closely at the gold production this quarter, production at Sissingué was slightly higher than our internal targets, and Edikan was slightly lower than our internal targets, largely due to a mishap that we had during a scheduled maintenance stoppage in August at Edikan, which resulted in a small period of lost production time. The challenges that we experienced with the wet season at Sissingué last year in the September quarter weren't repeated this year.
This is partially due to the fact that the rainfall was not as high as last year, but also due to the fact that the contingency measures that we put in place over the last few quarters have proved to be successful. And of course, I'm referring to the early cutback of interim pit walls, extending the run-of-mine pad, purchasing additional pumping capacity, shooting roads, etc. All of those things did increase the cost at Sissingué over the last couple of quarters, as we mentioned, but they did prove to be highly successful during the current wet, so money well spent.
The challenges that we experienced at Edikan last quarter in getting ore through our mill as a result of hardness of the ore being mined in the Esuajah North were addressed during the quarter through employing some new technology and software to give us better control of material flows and also improving our blasting techniques, providing better material breakage in the Esuajah North pit. The mechanical performance at both mines in terms of runtime, throughput rates, and recovery certainly compensated for scheduled lower head grade that was processed during the quarter, and if we can maintain this sort of performance as grade picks up later in the year, then production should be very good indeed. Now, one thing that was particularly pleasing for us at both the mines was the reconciliations that we recorded between our block model and what went into the mill.
If we look at Edikan, where we have had some challenges in the past, if we look over the last 12-month period, we're currently running at +2% contained metal. The last three months was actually +18%. So clearly, we're on the improve there. We're getting the gold that we think we're going to be getting. And at Sissingué, if we look at the entire project today since we started producing there back in 2018, it's +13% contained gold or +21% over the last three months. So certainly, the work that we're doing in terms of modeling firstly and then mining to model is very good. If we look at the group all-in site costs, as I mentioned earlier, our weighted average cost for the quarter was $922 an ounce, which is about 7% lower than the group's reported all-in site cost last quarter.
Now, this weighted average is based on costs at Edikan of a touch over $1,000, so $1,027, and that was 5.8% lower than the previous quarter. Costs at Sissingué were $709 an ounce, and they were down by about 10.4% on the previous quarter. As mentioned earlier, at both mines, gold production was up 2.6% on the previous quarter, 3.6% at Edikan and 0.8% at Sissingué. It was more than an improved production that caused the all-in sustaining cost to fall by 7%. At both mines, we had lower mining and processing costs and lower sustaining capital compared to prior quarters. Edikan's processing costs were helped by higher throughput rates, as I mentioned earlier. At Sissingué, we did move a lot less material this quarter compared to the last quarter, and maintenance costs were also down quarter on quarter.
During the quarter, we sold 73,561 ounces of gold at a weighted average price of $1,374 an ounce, generating positive cash flow at both of our mines. Now, obviously, we had stock on hand at the end of last quarter, which meant that we sold more than we produced this quarter. And as it turned out, that was quite fortuitous given the price rise that we saw during the last three months. In fact, based on this average gold price achieved of $1,374 and our all-in sustaining costs average of $922 an ounce, we generated an average cash margin of about $452 an ounce, which when we multiply that by the ounces of gold produced, generated the notional cash flow of $29.8 million that I talked about earlier on. And interestingly enough, the cash flow that we generated was split almost evenly between Sissingué and Edikan.
51% came from Edikan, 49% from Sissingué, although about two-thirds of the gold came from Edikan and about a third from Sissingué. And that's a function of the lower cost and better recoveries at Sissingué compared to Edikan. Now, during the quarter, we spent $5 million on paying tax in Ghana, $16 million on Yaouré CapEx. We've also had corporate costs, including the cost of establishing a new debt facility, exploration, movements in debtors, and creditors, etc. But after all of these things were accounted for, at the end of the quarter, our balance of cash and bullion stood at $120.6 million. And as I mentioned earlier, this was slightly more than at the end of June. I guess a further key point to note is that during the quarter, we repaid all of the outstanding bank debt that existed at the end of June.
We also paid for the establishment of the new $150 million facility, I should add. But what we did was we drew $40 million under the new facility to replace the cash that we'd used paying down the $31.5 million of debt at the end of the quarter. So this meant that our net cash and bullion position at the end of the quarter was about $81 million US dollars, which was slightly down on the previous quarter, but still a fairly healthy position to be in, particularly given the development activities that we are currently embarked upon. And speaking of that, speaking of development of our third project, Yaouré, as you'll recall, last quarter, on 26 April, we were finally awarded the exploitation permit to develop and operate the Yaouré Gold Mine in Côte d'Ivoire.
And then in early May, the Perseus board met and reviewed our plans, including our funding plan, and gave us the green light to move ahead with the development of the mine. Since then, things have been proceeding rapidly on all fronts. Off-site, a range of contracts have been awarded. In fact, about 64 of the 99 contract packages have been awarded, and tenders are currently under review on another nine packages. And so all up, about three-quarters of the tenders that we intend to let have been dealt with.
We've also called for tenders for contract mining services, and we have eight credible offers on the table, and we expect to be in a position later this month to award a contract that will give the contractor time to mobilise a new fleet to site and be ready to start pre-stripping activities around the beginning of the third quarter next year. The pricing of these tenders is pretty sharp, which not only creates the possibility of a saving in terms of development costs since there is some pre-stripping included in our capital cost of development, but it also opens up the possibility of reduced operating costs once commercial production starts at Yaouré. Fabrication of structural steel, including tanks, ball mill, SAG mill, etc., is very well advanced and are on schedule for progressive delivery to Abidjan. On-site, we saw the contractors starting to mobilise during the quarter.
Since May, we've been working furiously at ensuring we've got enough accommodation and facilities available on-site when everyone arrives to start work. In the September quarter, we mobilized two local earth-moving contractors to start work on various aspects of the job. Preparation of the building pad for the plant site was completed on schedule, was handed over to the contractors early this month, and as you'll probably be able to see from some photographs included in the quarterly report, work on the pouring of foundations of the ring beams for the CIL tanks has started. So that's well underway. What's also evident from these photos is the fact that clearing of the tailings storage facility is now well underway.
We were a little anxious early on that this activity might be slowed down by land access or by wet weather, but neither of these things have eventuated, and nearly 25% of the stage one TSF site has been cleared. Fencing of the site has also been underway for some time. We've got to do about 17 kilometers of fencing to fully enclose the site, and as at the end of September, we're about 25% of the way through that task. We're also well advanced on completing earthworks for the permanent camp. We've taken a decision to build the camp ourselves rather than contract this work out.
This will allow us to better control costs, but perhaps as importantly, or more importantly maybe, it also allows us to engage with the local community by ensuring that labor is drawn from local villages, giving people from the surrounding villages the opportunity to start benefiting from the Yaouré mine fairly early on in the piece. Now, at the end of September, we'd expensed about $61 million worth of costs, and we'd paid out about $28 million of the $265 million budgeted for the build. We'd also committed another $74 million. Now, what this means is that by the end of September, we had costs locked in associated with about 50% of our capital budget, materially reducing the risk of cost overruns.
Following the granting of the exploitation permit last quarter, we've commenced engagement with the relevant departments within the Ivorian government to negotiate the terms of a mining convention, incorporating a guarantee of fiscal stability to apply throughout the life of the project. We're making very good progress on that front, having met again actually twice last week in Abidjan. Having read the reports from our negotiating team over the weekend, it looks like we're well on track to having this document completed by the end of this year. That certainly looks to be an achievable target. And it looks at this stage that there are no major problems that should impede us reaching that agreement. At this time, if there are no further delays, then we certainly don't expect anything.
Our stretch target of producing first gold in December 2020 is achievable, and we're certainly doing all things that we and our contractors can do to deliver on this milestone. So the Yaouré development project is definitely moving forward. This quarter, we've achieved several major milestones, and I've got to say we're very excited about the project and what it means for us as a company. We have the team to execute this development very well, as we ably demonstrated with the Sissingué development. I was on site myself a couple of weeks ago checking up on things, and I was very, very pleased to see that the construction group, and that includes people who we directly employ and our contractors, are all very focused and very enthusiastic and looking forward to delivering a successful project, which is very exciting all around.
Now, turning to exploration, I guess this is one activity that hasn't been high on the priority list at Perseus in recent years due to cash constraints. That said, under the direction of our General Manager, Exploration, Doug Jones, we have been conducting low-key exploration programs at each of Sissingué, Edikan, and Yaouré. But this is about to change in the sense that we're currently also putting the final touches on an organic growth strategy that will be driven by exploration, both on our leases adjacent to our existing infrastructure at our three mines and also on land holdings nearby that host stranded assets owned by others. This strategy will be the subject of considerable discussion when our board meets for its annual strategic planning retreat around the time of our AGM in late November. And the programs that form part of that strategy will be rolled out from there.
Now, without waiting for that full-scale approval to come through, we are currently doing good work around Sissingué, and we hope that we'll be able to report a new minable resource located to the south of Sissingué and Zanikan later this year. Now, this will not be a huge standalone resource, but rather it'll add incrementally to our resource and reserve inventory, and will incrementally increase the life of the Sissingué operation. We're also looking at various alternatives around Edikan, where we are looking at a number of initiatives that if they stack up as we think they will, or we hope they will, they'll also incrementally increase the life of Edikan as well. I must say the early stages of that work is looking very promising, very encouraging.
Similarly, at Yaouré, we're in the process of drilling some deep diamond holes, targeting a structure that we expect will be able to host a material underground mining operation for some years to come off the side of the CMA pit. So that is looking interesting as well. Now, it's premature to comment any further on any of our exploration activities. It is interesting, though, because getting individual hits as we drill around Sissingué and Edikan and Yaouré has never been a problem. Getting consistent results that hang together to form a minable resource is more of a challenge, but finally, we are starting to get some encouragement on our own properties on this front. Now, news flow from each of these activities will become available progressively, and of course, as that does become available, we'll report the results to the market.
So wrapping things up, as I said at the outset of the presentation, the September quarter has been another good quarter for Perseus. We continue to achieve key milestones. We continue to do all the things that we said we were going to do. And in the process, we're building a very credible track record of consistent operating performance. Operations-wise, the next quarter should be a little better than this quarter, both in terms of production and costs. We are guiding the market to 120,000-140,000 ounces at a cost of $852 an ounce for this half year. I mean, as always, our guidance does allow for the unexpected to occur, but if all things go the way we plan, then we should comfortably achieve this target. And certainly, we've started this quarter reasonably well on plan as well.
So that all goes well for the rest of the quarter. In terms of development, Yaouré, as I said, has moved into high gear and will continue this way. We expect to see very good progress being made both on the ground and off-site. We're now moving out of the wetter periods of the year, so we should start to see some really good progress at Yaouré. And what we intend to do is to post on our website footage taken by our drones and also stationary cameras, which will enable investors to see the progress as it occurs. And I think that should be quite interesting. Exploration-wise, as I said, we'll be accelerating our efforts to not only extend the life of our existing operations, but hopefully discover our next mine as well. And hopefully, we'll have some positive news on both of those fronts as we move forward.
We certainly have worked up some interesting targets, but let's just wait and see how all of that pans out. So once again, we're gearing up for yet another busy quarter at Perseus. I'm not too sure when we haven't been doing that, but anyway, we've certainly got another one on the drawing boards. And hopefully, when I speak to you again in three months' time, I'll be able to continue bringing you a stream of positive news of our achievements and, more importantly, of the continued growth of the value of your investments in us. So thanks very much for listening, and very happy to take any questions that you may have now.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you are on a speakerphone, please pick up the handset to ask your question. Your first question comes from Reg Spencer with Canaccord. Please go ahead.
Thank you. Good morning, Jeff. Congratulations on what looks like a pretty good quarter. Just two very quick questions from me. The first one is around Ghanaian tax. I was wondering if you could provide some kind of guidance around the timing of cash tax payments and, I guess, not so much the quantum, but more around the timing. Is that more like a similar Australian system? Because this is the first time I've seen you guys pay some cash tax up there. So I just wonder if you could give me a little bit of color around how that might look going forward, please.
Yeah. Well, we are paying tax. I think that'll be a quarterly payment going forward, working out what we have due. And then, I guess, at the end of the year, we reconcile it back and the like. So yeah, it'll be a permanent feature for Perseus going forward, and that's fine. I mean, we have used accelerated depreciation as we're permitted to do under the law. That's why we haven't been paying a lot of tax up until now. But now we're in a position where we can start to share the benefits of our work with our host government, and we have no issue around that, and we'll be continuing to pay on a quarterly basis from here.
Okay. That's good. Don't get me wrong. It's a good thing that you're paying tax because it means you're making profits. So that's fine. Just the next question was around Zaninkan. Looks like an interesting target down there. I was wondering if you could provide us with what the resource or exploration target there would be. And following that, if that resource drilling program was successful, where might that fit into a mine plan at Sissingué? Because it does look like it could be a slightly higher-grade deposit than your existing reserve. Does that come in sooner, subject to permitting, or is that something that might tack on to the end of the existing reserve life?
Yeah. I think I said, Reg, that I wasn't going to provide any details until we released it all to the market, if I remember correctly. But anyway, let's just say, look, it's an interesting target. It looks quite interesting. The thing about it is that it is on the way to Fimbiasso, which is the area that we intend to mine later in the life of the project there. So we're mining the Sissingué pits at the moment, and the current mine plan has Fimbiasso coming in in about a year and a half time from now. Zaninkan is on the way to Fimbiasso. So what it means is that we'll start building a road down there as soon as we have delineated a resource, and then we'll bring that into the mine plan first and then continue the road construction through to Zaninkan.
It's only about, I think it's about 20 km south of the Sissingué pits, so it's not a—and there are existing roads down there, so it's not like a major endeavor to get access. It's just upgrading a couple of existing local roads. And so we'd be looking at bringing that material into the mine plan towards the end of next year, I think it is. We haven't actually finalized those things as yet, but it's sort of later. But first things first, we've got to finish off the resource estimation and then the optimization of the pit, and then we'll pull it into the mine plan. So we don't want to get ahead of ourselves, but it's certainly looking interesting.
Okay. I'm sorry, Jeff. I must have missed your comments earlier around Zaninkan. But did you mention when we might expect an initial resource?
No, I didn't, actually. But it'll be soon, Reg. Not soon.
Okay. Understood. Thanks very much, guys. Appreciate it.
All right.
Thank you. Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. Your next question comes from Nick Herbert with Credit Suisse. Please go ahead.
Good morning, Jeff. Four questions for me, please. Firstly, just starting on Edikan, that higher G&A cost you referred to in the period relating to security costs, was there a particular incident at site that related to?
Not particularly on site. There have been incidents around the area. The government of Ghana has come out very strongly to try to stamp out the illegal mining trade in Ghana, which, like a lot of countries in Africa, is a material problem for the governments because it leads to the leakage of a lot of revenue that they might otherwise collect. Now, Ghana is no exception to that, and there are a lot of foreign influences that have exacerbated that situation over the years. So the government has established a task force that moves around the area to try to bring an end to those activities. And we have hosted that task force on our site during the quarter, and we provide them with food and lodging sort of thing for that. So there is a small element around that, but it's not dramatic.
But it did push our G&A costs slightly from where it had been in previous periods.
Okay. Thank you. Then just a couple on Yaouré. You mentioned the stretch target of first production in December 2020. I'm just wondering what the base case target is then for?
The contracted target is the following month, in January 2021. But we have every confidence in our people and our contractors to come in earlier. And much to their annoyance, I keep talking about the stretch target because they want that to be the target rather than the contracted target.
Yep. Makes sense, and then on the mining convention, you sound pretty confident negotiations have pretty well progressed. I'm just wondering, what is the risk around a potential change in fiscal terms from here, or you think it's pretty much?
I don't think there's any real risk of change in fiscal terms. The fiscal terms are well established in the law in Ghana. And what this document does is that it confirms that the law that applies at the present time will apply throughout the life of the project. And then it also goes in to talk about some of the nuances around our relationship with the government and the community going forward. So look, it isn't finished as yet, but as I said, I have seen and I've received reports over the weekend from our negotiating teams. And while there are some points of difference that still need to be resolved, there's nothing in there that causes me to be overly anxious about us being able to close this out in a sensible timeframe.
Okay. Excellent. Thank you. And then just final one. Just on your hedging, the spot-deferred contract component, I'm just wondering, what's the cost associated with rolling those forward? Do you expect to?
That's a minor detail that we normally don't put out, and I don't think our bankers would really like us to disclose that, but it's a small amount. And those contracts have already been rolled out, most of them, I think, if not all of them. So the cost that we're talking about in there, the weighted average cost, is the cost net of any fees for rolling.
Okay. Great. That's it. Thanks, Jeff.
Okay. Thanks, Nick.
Thank you. Your next question comes from Adam Baker with Global Mining Research. Please go ahead.
Yeah. Good morning, Jeff and team. Just had a follow-up on Zaninkan. Just wondering how hard it'd be to bring that into production with regards to permitting and is there any relocation of villages, etc.?
Zaninkan is on our existing mining lease, and we have been doing for some time environmental baseline studies as soon as we thought that we might have had a chance of a resource down there. So what we'll need to do is to incorporate those results into an amendment to our ESIA, which is our environmental plan for the permitting. So that's not a massive exercise. But as to the actual permitting itself, that doesn't require a big exercise. One of the interesting things, actually, in Côte d'Ivoire that I think is very helpful for the industry over there is that very recently, I was in Abidjan meeting with the Department of Mines and Industry who were looking to establish a five-year plan to encourage mining in Côte d'Ivoire.
One of the things that they are looking at is how remote or stranded assets can be brought into production without having to have a full-blown development on those assets. At the moment, if you have a separate mining lease, the law would require you to have a separate processing operation. The government has recognized that that's no longer practical or not practical, if it ever was practical. What we'll be seeing is the way paved to allow resources to be brought in and processed centrally, very similar to what occurs in Western Australia. I think that's a very positive initiative that the government of Côte d'Ivoire is considering. It means that it gives us the opportunity, having a very efficient processing plant at Sissingué, to become a center of processing of ore from the district.
That's something we can work with the government on going forward and hopefully have a sensible outcome.
Excellent. And Andrew Grove. There's no village relocation, just some crop compensation.
Sure. Thanks for that. Just a second question. Just on the Yaouré debt funding, just wondering how we should think about the debt that remains to be drawn over the next few quarters?
It's available to us, that's for sure. Now, the thing is that our position, I suppose, is that we recognize that our investment cycle is probably longer than the commodity cycle. And as such, we, I guess, tend to be relatively conservative in our approach to debt. And so we will probably use internally generated cash in preference to a lot of debt. So I'm not sure how you want to think about it, but we do have the ability to draw up to $150 million. Whether we do that or not remains to be seen. We'll manage our balance sheet, our gearing ratio to ensure that there's no prospect of the company being put at risk.
Excellent. That's all from me.
Thank you.
Thank you. There are no further questions at this time. I'll now hand back to Mr. Quartermaine for closing remarks.
Okay. Thank you very much, and thank you for your attendance on the call today. It is appreciated. As I said, it has been another very strong quarter for us, and things are going very well. The turnaround of Perseus Mining as a junior to mid-tier mining operation has occurred some time ago, and it continues to push forward very strongly. And we're looking forward very much to bringing further updates as we go forward on a quarterly basis. But as news flow comes to hand, we'll also talk to our constituency. So thanks very much, and we will speak soon.