Thank you for standing by, and welcome to the Perseus Mining March 2019 Quarterly Call. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Jeff Quartermaine, Managing Director and CEO. Please go ahead.
Thank you very much, and welcome to this conference call to discuss Perseus' March 2019 Quarterly Report that was released to the market earlier today. For those of you who've had an opportunity to read the report or have been following the company through our recent market releases, you'd realize that it's been a very busy and, can I say, highly successful quarter for Perseus. Our two mining operations are performing very strongly in line with our expectations, and our costs are falling to almost unprecedented levels, particularly at Edikan, reflecting a range of initiatives that we've been working on for some time. Our third mine development, we've moved that up to the starting line. We've put in place the funding that's needed to fund the Yaouré, and subject to the Ivorian government delivering the final exploitation license, we're ready to move forward to build that mine.
Our financial strength continues to increase each day. We're generating a significant amount of net cash, and we've materially reduced trade creditors, and we've positioned the company very well to continue our growth into the future. All of this clearly points to the fact that Perseus is delivering on its promises of doing what we say we're going to do, which goes very much to the core values of this company. So let's turn to the quarterly itself and talk about what has been delivered in more detail. So looking at the group as a whole, across both of our operations, we produced a combined total of 67,144 ounces of gold. 44,680 of that came from Edikan, and 22,464 ounces from Sissingué. In total, that's about 1% down on the previous quarter, but very much in line with our expectations.
Turning to Group All-In Site Costs, our weighted average All-In Site Costs for the Group for the quarter was $851 an ounce, which was 19% lower than the Group's reported All-In Site Costs last quarter. This weighted average cost is based on cost at Edikan of $900 an ounce, which is down 22% on the previous quarter, and cost at Sissingué of $753 an ounce, which is down about 3% on the previous quarter. Looking forward and given these results, we're expecting to meet guided production for the June half year and the full 2019 financial year, both of which end on 30 June. We're forecasting 130,000-150,000 ounces for the half-year period and should end up comfortably in that range. In terms of guided costs, we're currently operating at the bottom end of the All-In Site Costs range of $850-$1,000 an ounce for the half year.
In fact, if everything stays on track, which I expect it to do, we should end up doing well relative to guidance. Returning to the March quarter, we sold 63,838 ounces of gold during the quarter at an average price of $1,284 an ounce, generating positive cash flow from both of our mines. In fact, on this average gold price and at our average all-in site cost of $851 an ounce, we generated an average cash margin of $433 an ounce, which, when multiplied by the ounces of gold produced, generated notional free cash from operations of about $29.1 million, or more than double that of the prior period. 17.1% of that came from Edikan and 12% from Sissingué. Now, obviously, all of this cash doesn't go directly to our bank balance. We need to service debt, pay corporate costs, and we choose to explore.
We've also had movements in debtors and creditors, but after these things were all accounted for at 31 March, our cash balance stood at, sorry, our balance of cash in bullion, I should say, stood at $80.8 million, which is 24% more than the balance at 31 December 2018. A further key point to note is that the outstanding bank debt at the end of March also decreased to about $44.5 million from $48.5 million the previous quarter, which gave us a net cash and bullion position, a positive net cash and bullion position of $36.3 million at the end of March, which was an increase of about $19.9 million, or 121% for the quarter. So there's very clearly strong growth in our net cash and bullion position. On the corporate finance front, we've also been very busy during the period.
We received and have accepted an offer from a consortium of international banks, including Macquarie Bank from Australia, Nedbank from South Africa, and Société Générale of France, to provide Perseus with a revolving cash advance facility of $150 million. The committed letter of offer containing a comprehensive term sheet was executed just after the end of the quarter on 5th of April. Definitive finance documentation is now being prepared based on the terms contained in the agreed term sheet, with the aim of having the facility available for drawdown no later than 30th of June. The facility takes the form of a revolving loan and credit, with the borrowers being Perseus Mining Limited, the parent company, and a couple of our operating subsidiaries. Specific terms of the facility are typical of a corporate loan and credit of this type.
Interest payable on the loan will be LIBOR plus a margin that will initially be 4.25%, and going forward, that will vary in line with the company's leverage ratio. In addition to this, on the 15th of April, also after the end of the quarter, we announced that we had entered into an underwriting agreement with Canaccord and Hartleys to underwrite the exercise of 102.5 million Perseus warrants. Now, to put this matter into perspective, in April 2016, Perseus issued 143 million unlisted warrants, exercisable at AUD 0.44 per warrant, at any time within a three-year period, to the shareholders of Amara Mining PLC as part of the consideration for their shares in that company. Since that date, about 40.5 million warrants have either been exercised or are in the process of being exercised by the holders of the warrants, i.e., that's ex-Amara shareholders.
Now, under the arrangement with Canaccord Genuity and Hartleys, they are acting as joint lead managers, guarantee the exercise of any of the outstanding 102.5 million warrants that are not exercised by warrant owners prior to expiring. The total amount that could potentially be raised from the exercise of the underwritten warrants is approximately AUD 45 million before expenses. Now, the exact number of shares that the underwriters will get to place will depend on exactly how many warrants remain unexercised by current owners at 19th of April, and it is this shortfall only that'll be placed by the brokers. Now, the point that needs to be understood about this is that, contrary to what was reported in the newspapers yesterday, Perseus has not and will not be issuing any additional securities.
This exercise is all about ensuring that the existing warrants are exercised in full and that we receive the full proceeds from the warrants that were issued in 2016, i.e., there will be no further dilution of shareholders beyond that which the market has been aware of and has been factoring into their calculations since April 2016. I should also note that Canaccord and Hartleys have received very significant demand from large institutional and domestic investors, including several of Perseus' existing shareholders, to sub-underwrite the exercise of the warrants. The whole exercise has gone off very smoothly, and we're looking forward to receiving proceeds in a few weeks from now.
All in all, with the funding of the warrants, it strengthens Perseus' balance sheet, and together with the recently announced $150 million corporate debt facility, our existing cash and bullion balance of $81 million, and further cash flows from operations over the next couple of years, all of this ensures that Perseus is very well positioned to fund the development of Yaouré, as well as other further exploration activities and growth initiatives. As I said earlier, it's been a very good quarter for Perseus, and we're now in an unprecedented position of strength to meet the challenges of the future. Let's look briefly at each of the operations, starting with Sissingué, our newest mine.
I've already mentioned that we produced 22,464 ounces for the quarter at an All-In Site Costs of $753 per ounce, generating notional cash flow from the operation of approximately $12 million, or $3.4 million more than last quarter. This solid performance was driven by the gold recovery rate again, which continued to average around 95%, or about 4% above forecast, notwithstanding the fact that our mill feed included a significant proportion of fresh ore. In terms of grade and nage reconciliations, the study of reconciliation of tonnes and grade between the reserve model and the mill for the period commencing from mining in November 2017 to the end of the quarter continues to track as forecast with a slightly positive reconciliation on contained metal.
Last quarter, we flagged that with an eye to the next wet season and making sure that we don't have a repeat of last year's challenges, we've decided to continue to move additional waste material to bring forward the cutback of the final wall on the stage three pit. The thinking here is that by bringing forward the cutback of the pit wall, we should be able to avoid slumping of the interim wall as occurred last year should we get another very heavy wet season. We did this during the March quarter, and this is the reason why the costs were not a lot lower than 3% relative to last quarter's costs, notwithstanding that the actual increase that the ounces produced increased by 25% period on period. But anyway, all things considered, Sissingué's once again been a very solid contributor to our business this quarter.
Now, turning to Edikan, I mentioned we produced 44,680 ounces for the quarter at an all-in site cost of $900 per ounce, generating notional cash flow from the operation of approximately $17 million, or $12.6 million more than last quarter. Now, this is a very good result from Edikan. In fact, the costs are as good as they've been in a very long time, if not ever, and there are a couple of things that need to be pointed out to put some context around this. Firstly, this is the first quarter in which our updated Edikan mining strategy took full effect, substantially lowering the mining volumes required to meet planned mill feed relative to previous quarters.
The implementation of this strategy, which uses a single mining contractor, Rocksure International, has led us to mining and processing a lower head grade of material than in the past because we're no longer streaming the higher grade ore to the mill and stockpiling lower grade material. Instead, everything we mine is fed to the mill, and that has the effect of lowering the average head grade and therefore gold production, but at the same time, it substantially reduces unit mining costs, and costs are down to $3.06 a tonne this quarter. This is a decrease of 27% relative to the previous quarter, and it should be noted, however, that the previous quarter's mining costs were inflated a little due to the inclusion of a one-off demobilization cost of mining contractor AMS.
But even so, I think the drop in mining costs that we've achieved this quarter as a result of this change in strategy is a great result. Now, the objective of this change in strategy was to optimize cash flow, and based on the increase of notional cash flow by $12.6 million to $17.1 million, it does seem that our plan is indeed working as we had hoped it would. The other thing to note about this quarter at Edikan is that the quantity of ore processed was down about 13% on the prior quarter, reflecting lower throughput rates. We achieved 809 tonne per hour compared to 877 tonne per hour, and we had lower run time, 86% compared to 90% in the previous quarter. Now, the reduction in throughput rates appears to be a function of processing hard ore from the Esuajah North Pit that requires longer grind time.
That's relative to what we were processing in the past. Measures to improve the throughput rate are being implemented as we speak, including installing new software and hardware to monitor mill performance in real time and undertaking a mountain mill project to optimize blast fragmentation, comminution, crusher optimization, recovery, and cost. Improvement in this key operating parameter is expected to be achieved progressively over the remainder of 2019 as we continue to process ore from Esuajah North. Run time is also down in the quarter, as I mentioned, due to a series of unplanned stoppages. They were things that were relatively minor in nature, but nevertheless, it did bring us down. Steps to reduce the likelihood of further downtime for similar reasons in the future have been implemented, although, of course, as we know in this game, that's no guarantee that they won't happen again.
But generally speaking, that should not be the case. Another point to note is that grade reconciliation has been another beneficiary of our change in mining strategy. Now, even though the grade of ore that we're processing is lower than previous periods, so about 1.07 grams a tonne to compare to about 1.15 grams a ton last quarter, the reconciliation of contained model between the block model and the mill is now positive. It's still early days, but this is a very positive development because for some time at Edikan, we've been experiencing a mine call factor, which has been very difficult to rectify. Hopefully, we found the answer, but time will tell.
A further piece of positive news is that in early January, we processed the last of the fine grain carbonaceous material from the Fetish Pit, and since then, recoveries have shot back up to around the 86%-87% mark, which is where they are supposed to be. You'd note, of course, that while the Esuajah North ore is harder than the Fetish ore, the recovery is much better, but throughput rates are down, so there is a bit of an offsetting factor about all that. In terms of exploration at Edikan, in recent times, we have increased activities in the field on the tenements aimed at extending the current six-year mine life that we have. Last quarter, we reported drilling on the Esuajah Gap prospect between Esuajah North and the Esuajah South deposits, and we said that we appeared to have discovered a significant mineralized granite body.
Now, as it turns out, we have enjoyed a technical success in discovering that granite ore body. However, with further drilling during the quarter, it does now appear that it's not large enough to be able to justify the expense of removing all of the houses that are on top of the ore body, and hence, the material extension of mine life that we were speculating on has not come to pass. We will, however, get a small extension of the life from an oxide ore body that we have discovered close to the village, and it can be mined without blasting, but it's not of a magnitude that's going to make a material difference to the overall mine life at this stage. So, notwithstanding the news on exploration, Edikan's also tracking currently very well.
It's contributing 66% of our gold, and for the first time, it's generating 60% of our combined cash flow, and I'm sure that you'll agree that's a very material improvement and something that hopefully we can maintain going forward. Now, earlier, I mentioned our third project, Yaouré, in the context of talking about the progress we've made in organizing development funding. Other specific things that we've done during the quarter to advance Yaouré to a development decision are as follows. You'll recall that we submitted our application for an exploitation permit back in January 2018, and we're very disappointed this quarter when the government in Côte d'Ivoire was unable to find time to fully consider our application for that permit. All that needs to be done by Perseus to have cabinet approve the license has been done.
We've been assured on several occasions that it was on the agenda for discussion, but unfortunately, it has not reached the top of the pile during the cabinet meetings. We remain hopeful that when cabinet reconvenes immediately after Easter, the matter will finally and favorably be considered and the license will be granted. In fact, we're very confident that that will be the case, but as is always the position, until it happens, it doesn't happen, but it's certainly looking very, very favorable. Now, as soon as the license is granted, negotiation of the terms of the mining convention, incorporating a guarantee of fiscal stability to apply throughout the life of the project, will start immediately. We're very keen to get this milestone behind us as soon as possible, I might say.
As, of course, we will be very keen to get the final payment, final installment of crop and land compensation to the relevant stakeholders. They are most certainly waiting for that and are very keen to have the project move ahead because there are very definite benefits to be received by the community, not just compensation payments, but certainly opportunities for employment, education, improvements, and health, and various other initiatives that the company has in mind. Now, we intend to move immediately into full-scale development mode once the license has been granted, and both Lycopodium and the engineers who'll be developing the plant and our own development team are working full steam ahead in preparation for that day, finalizing engineering and procurement arrangements as we speak.
Now, at this time, if there are no further delays in licensing, our target date for producing first gold of December 2020 is still achievable, but obviously, if there are continued delays in licensing, this will eventually impact on that schedule as all available flow will be consumed. So, the Yaouré project is most definitely moving forward. This quarter, we've achieved a major milestone in putting development financing in place, and we're very excited about this project and what it means for Perseus going forward. We have the team to execute the development, as ably demonstrated by the very slick Sissingué development that occurred last year, and as soon as we can, we'll get underway with the project. So, in conclusion, as I said at the outset of the presentation, it's been a very good quarter for Perseus.
We continue to go from strength to strength, methodically implementing the growth strategy that we have for some time articulated to the market. Not only that, but in improving the all-round strength of the business, we're also building a platform on which to base the continuing transformation of Perseus into a formidable market presence that surely must command the attention of not only the active investors in gold shares, but also the passive investors who seem these days to be the dominant force in the market in terms of determining share prices. In short, things are looking good at Perseus, and both myself and my team are looking forward very much to an even better future for all of our stakeholders. So, thank you very much for listening to this. I'm now very happy to take any questions that you may have.
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 Michael Slifirski from Credit Suisse. Please go ahead.
Good morning, Jeff. Congratulations on a great quarter and on achieving so much in that period. A few questions. First of all, what's the estimated timeframe to complete the body of work that you need to do at Yaouré ahead of the wet season? And then if you sort of, when's the potential sort of start date of that wet season? I know you can't predict it exactly, but if you back from that with the body of work that you need to complete, how much flex do you have before you lose whatever that chunk of time is?
Look, it's really very difficult, Mike, as you said, to be prescriptive about that, but we've got a couple of months basically to get in. What we want to do initially is to start removing topsoil and vegetation around the tailings dam in particular and around the plant site. And I mean, the plant site is most critical, is more critical than the tailings dam, but in both places, we want to get on and do that so that we don't get bogged down by the wet. But as to trying to predict wet seasons, very, very difficult. I mean, as you'll recall, when we built Sissingué in 2017, we had a relatively dry period, and then in the first year of operation, we had 50% more rain than the 40-year average. So, we're not very good at predicting rainfall.
What we just need to do is to get on with the job and do as much work as we can as soon as we can.
Okay, thank you. And then secondly, once you have the exploitation permit, do you have a view as to how long the mining convention takes to put in place? I mean, could there be similar delays to getting that complete? I know that the Sissingué model is what you expect to be able to replicate, but do you have a view as to how long that could take?
Look, no, we don't have a definitive view once again, but certainly from discussions we've had with the bureaucracy, we don't expect it to take terribly long at all. And as you said quite rightly, the Mining Convention that we negotiated on Sissingué is the last one that's been negotiated in country and is being used as the standard or the model for all future development. So, I don't know that there'll be a huge amount of things to negotiate, so we'd be looking to wrap that up fairly quickly, and in fact, we'd like to get that done certainly prior to the end of June, the June quarter.
Okay, thank you. And then finally, with respect to the $150 million facility, that margin's LIBOR at 4.5%. How much does that change when you look at your cash flow and your leverage ratio that falls from that? Where might that peak?
Look, it could peak at about 5%. It's actually 4.25% to start with. It could peak at about 5% or it could go down to 4%. It's in that range of 4%- 5%, but I mean, for it to get to 5%, it would mean we'd have to have some significant shortfalls in our EBITDA and blowout in indebtedness. So, I mean, based on the models that we have put together with the banks, we don't expect to see a great deal of variation in that rate, but it can certainly happen if there are changes to our operating performance along the way.
All right, thanks, Jeff.
Thank you.
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. There are no further questions at this time. I'll now hand back to Mr. Quartermaine for closing remarks.
Okay, well, thanks very much. I hope the fact that there aren't too many questions is a reflection that the matter's been thoroughly canvassed and been clearly articulated. The point of the matter, of course, is that it has indeed been a very good quarter for us, and we are starting to feel that we're making material progress towards putting Perseus on the map, and hopefully, we can continue to produce similar results in coming quarters. And we look forward to joining you again in three months' time to bring this news to you. So, thanks very much for joining us today, and have a good day.