Thank you for joining the Perseus Mining and Exore Resources Conference Call. All attendees are in a listen-only mode. If you have a question, please type it into the Q&A panel within Zoom. I'll now hand over to Perseus Mining's Managing Director and CEO, Jeff Quartermaine. Thank you, Jeff.
Thank you very much, and welcome to the listeners today, and also a special welcome to my colleague here, Justin Tremain from Exore Resources, who's joining me today to present this situation to you. Just recapping, this morning we announced jointly, we announced that Perseus is to acquire all of the shares in Exore Resources.
And what I'd like to do this morning is to take you through the transaction, look at the detail of what is proposed, talk to you about the rationale for it, and also give you some insight into each of the companies. So, without further ado, looking at the transaction we've announced this morning. So, as I say, Perseus is to acquire 100% of the shares in Exore Resources.
We are using a scheme of arrangement to give effect to this transaction, and as part of the arrangements, Exore will be exercising their rights to acquire the remaining 20% of the Bagoé and Liberty projects that is currently owned by Apollo Consolidated.
Now, in terms of the consideration that's being paid, so, Exore as I said, it's a scheme of arrangement that will be effected via a transfer of Perseus shares to Exore shareholders. Each Exore shareholders will receive one Perseus share for every 12.79 Exore shares that they currently hold.
Now, based on the Perseus's 10-day trading VWAP, this equates to a share price for Exore of AUD 0.098 per share, or approximately AUD 60 million for the fully diluted equity value of the company. Obviously, in a situation where we're exchanging shares, the value to Exore shareholders changes depending on the price of the Perseus shares.
Based on last night's pricing, for Perseus, the transaction was actually valued at AUD 64 million, or AUD 0.105 per share for Exore shareholders. This does represent a reasonably significant premium for the transaction, 69% premium to the closing Exore share price yesterday, or 78% to the 20-day VWAP.
The board of Exore has unanimously agreed to recommend this transaction and recommend to shareholders that they vote in favor of it, obviously subject to a superior proposal not being tabled, and also subject to a favorable report from an independent expert.
The conditions in the scheme of arrangement are very standard, and I think that if people are seriously interested in that, they can take a look at the actual scheme document which is attached to the release that went to the market this morning.
Based on where we are right now, having announced this morning, Exore shareholders will be meeting, probably early September by the time the independent expert's report is completed, and then it'll be, depending on the outcome of that shareholders' meeting, the courts will consider a proposal to complete the transaction, and hopefully that will be finalized by mid-September this year.
So, what it actually means in terms of share swaps and the like, so what Perseus is essentially doing here is issuing about 45 million shares to the Exore shareholders in total. It represents slightly under 4% of the total shares that will be initially post the transaction.
But obviously, the combined entity is a fairly strong business with a strong enterprise value approaching the 1.6 billion mark, and certainly the importance of that is that the combined entity is in a position to take the projects, the Exore projects, forward very readily. So, if you look at the transaction rationale, why did Perseus do this transaction with Exore? Now, it's fairly apparent, really.
As people know, we have three mines, or two operating mines, and a third currently in development. One of our mines is the Sissingué Gold Mine, which is in the far north of Côte d'Ivoire and is on a tenement up around here. Now, Exore holds a very significant land package in our neighborhood, if you will, approximately 2,000 sq km, and these tenements are located well within trucking distance of the mill at Sissingué.
Now, recently, Exore announced a maiden resource on the Bagoé project, and that resource has the potential to be either developed as a standalone project or indeed to be transported up to the Sissingué Mill into the future. I mean, there's clearly work to be done to transform from the early resource stage, but that is something that we'll get on to further down the line.
As I said earlier in the introduction, Exore has also taken the opportunity to pick up the remaining 20% of the joint venture on the Bagoé and the Liberty projects that they didn't previously own, and we think that having 100% ownership in a single person's hands is a major benefit.
I mean, clearly, Perseus has the financial capacity, the technical capacity, and in-country experience to advance not only the Bagoé and the Liberty projects, but also to explore on these tenements.
And in addition to that, we have a very, very good milling operation at the Sissingué Mill, an outstanding mill there, very, very efficient, and it means that the shareholders of Exore get the opportunity to have the benefit of that as a result of being able to put that material through there and monetizing the value of their tenements.
So, the rationale for the transaction, I think, is quite strong. We think it's quite strong. And at this point, I'll hand over to Justin to perhaps talk about the specific benefits that will accrue to your shareholders, and also to give listeners a bit of a more in-depth look at what Exore has actually been up to.
Sure. Thanks, Jeff. Yeah, so just to reiterate, as Jeff mentioned, the board of Exore is obviously recommending this proposal under a scheme of arrangement, really just subject to the independent expert's report and then ultimately a shareholder vote, which would happen towards the end of August with hopefully a conclusion in early September.
There's a number of advantages that we see as a board for Exore shareholders. Firstly, this transaction facilitates us exercising our preemptive right to acquire 100% of the Bagoé and Liberty projects. We believe the projects are highly prospective.
As Jeff touched on, we've defined a maiden resource in a relatively short period of time of 530 thousand oz of gold at a one-gram cutoff or 600 thousand oz at a half a gram cutoff. We've achieved that in just a little over 12 months, and we see significant scope to continue to grow that resource.
However, this transaction with Perseus, a much larger and financially strong partner, removes and mitigates any ultimately financing risk for Exore shareholders in what we see as the ultimate development of this project.
Secondly, there's obvious synergies given the proximity of our project to the Sissingué operation, which is a fantastic operation and has been obviously built on time and I think ahead of budget by Perseus and is operating very well. So, there's obvious synergies, which I think will result in cost savings in both capital and operating for both Perseus and Exore shareholders.
Thirdly, we see Perseus as a preeminent mining company in Côte d'Ivoire, a jurisdiction that we're very comfortable with and see a lot of growth potential in, and there's no doubt from our experience in Côte d'Ivoire that Perseus and Perseus Management is held in high regard by the Côte d'Ivoire government.
And we see opportunities for Exore shareholders to participate in the growth of Perseus in West Africa over the coming years as it emerges into a plus 500 thousand oz gold producer. Then there's the other, I'd say, secondary benefits for shareholders, which are things such as the additional liquidity that Perseus offers for our shareholders and obviously the premium that it represents to our recent trading price of Exore.
Yeah, and then also generally in northern Côte d'Ivoire, and what attracted us to Côte d'Ivoire originally is we see northern Côte d'Ivoire has been a highly prospective yet essentially unexplored region.
As Jeff mentioned, we've grown our position there to about 2,000 sq km, but as you can see in the map here, Perseus itself, not just at the Sissingué Mining license, but outside the Sissingué Mining license, also has a substantial exploration position.
So combined, it becomes the dominant. Perseus will become the dominant landholder in this part of Côte d'Ivoire, which we see as a highly prospective part of West Africa. So, we see significant exploration potential going forward.
Thanks, Jeff.
Okay, good. Okay, well, look, I mean, in terms of the benefits to Perseus, I think we've already touched on those fairly well, and it's clearly a situation where with a bit of further work, we can either expand the resource depending on how successful we are with drilling, etc. We can potentially get that material into the Sissingué Mill or alternatively use the Sissingué Mill for a standalone development depending on how the economics stack up.
Either way, the opportunity to monetize a resource in our neighborhood is something that's extremely attractive, and having a dominant land position up that way is something that excites us a lot. We've known for a long time that there's an awful lot of gold in the area, in this particular area.
It goes back a very, very long time, and of course, if we can convert that into minable resources, then clearly that's a major benefit for all of our shareholders going forward. Now, for those of you who aren't perhaps fully familiar with what Perseus is about, I'd like to just run you through very briefly a bit of an overview of the company.
So, we are a West African-focused business. We have a multi-mine, multi-jurisdictional portfolio. As I said earlier on, two operating mines: Edikan in Ghana, Sissingué in Côte d'Ivoire, and our third project, the Yaouré Gold Mine, is well into construction as we speak and should be producing gold by the end of this calendar year.
What that means is that by the end of this calendar year, we'll be starting to produce gold at a rate of around 500 thousand oz per year level at a weighted average all-in site cost between the three operations around the $850 an ounce level, $850 US, that is, and of course, the current gold prices, that represents very, very strong cash flow growth, and that's important for several reasons.
Obviously, it allows us to finance the development of projects such as Bagoé or Liberty and to bring that into the reserve inventory, but it also gives us an opportunity to look very seriously at returning money to shareholders in the form of dividends, and that is something that we'll be looking at very closely going forward. We have been operating in West Africa for some time, both in Ghana and in Côte d'Ivoire.
We do practice very sound ESG principles in every operation that we have, and that's something that is important to us, and it is important not because we're seeking to beat our drum about being very virtuous around the matter, but it makes good business sense.
It makes very good business sense because we do recognize that we are operating in someone else's country, and by acting responsibly, I think it improves our relationships, and that, of course, is very important on a looking-forward basis.
We do have a very experienced team of people here, both at the management and at the board level, and we have a long history of delivering on promises. So, the company is in a very strong position at the present time, and I think that by bringing Exore into the fold, as it were, the future of the company is looking very promising.
We do have an attractive growth profile. This chart shows what will be coming from Perseus over the next few years, and that's without any addition to the resources or reserves at any of our three operations, and I can tell you that we are looking actively around Edikan, Sissingué, and Yaouré, and we do expect that we will materially add to our reserve inventory.
And of course, the acquisition today that we're announcing goes directly to that point, and that means that the opportunity to extend the production capacity of the Sissingué operation out into the future, several more years in the future, means that the opportunity to keep our production levels around the 500 thousand oz a year for several more years is certainly enhanced.
And of course, that feeds directly into our ability to generate cash, and as I said, we have been generating quite a good deal of cash, and we are in a fairly strong financial position as a result of the cash flow generating activities at the other two mines.
So, to wrap it up, as I said at the outset, we do have a process to go through to bring this scheme of arrangement to fruition. There are a number of meetings with the court, and the shareholders of Exore will need to meet and to consider what's being offered. I'm not sure what's happened there.
But anyway, right from today onwards, we'll be working together very carefully and closely to make sure that we keep to this timetable, if not ahead.
We get the independent expert to opine on the merits of the transaction so that when shareholders come together in early September, they can make a decision to either accept or not on this transaction and be fully informed, and of course, if that is a positive outcome, as we hope it will be, then we'll be able to move through the court processes once again and have the transaction fully implemented around the middle of September.
S o that's pretty much the situation today. We have put into the market quite a detailed market release, including the details of the scheme implementation agreement, and we've also put a copy of this presentation into the market, and it'll be on our website later today, so if anybody would like to find more detail around what's actually being considered, then there are certainly good sources of information for you to look to.
But at this point, we will pull up our commentary and open the floor to questions.
Thanks, Jeff. There are two questions from David Radclyffe at Global Mining Research. The first one is, "Could you please provide more color on the synergies with the Sissingué Mill?" And the second one is, "He's also after a rough timeline to convert reserves, permit, and add any required infrastructure." Thank you.
Okay, well, I mean, the synergy is fairly apparent. The Bagoé Project's about 70 km from the Sissingué Mill, and it can be trucked. All from these deposits can be quite readily trucked up to Sissingué for processing through the mill.
Now, we are about to commence the trucking operation in the next year or so from the Fimbiasso license, which we own, which is about 50 km from the Sissingué Mill. And so, by the time we are in a position to make a decision to either develop a standalone or incorporate it into Sissingué, we'll be well and truly practiced at hauling material relatively short distances back to the plant.
So, I think that the ability to do that is pretty clear, and I think that as we become more experienced at the trucking business, I think that we actually believe there are some fairly significant cost savings to be achieved on that as well. So that is the position.
As for the timeline, look, I think at this stage of the game, having just announced the transaction, it'll be premature to be laying out specifics. What we will do from this point forward, as soon as the transaction is complete, or actually before the transaction's complete, we'll start talking with Exore around the exploration programs and the like.
But what needs to happen is that we would envisage doing a further drilling program to see the opportunity for expanding the resource before pushing it through the process of doing a feasibility study, which will need to be tabled with the Yaouré government to have a mining lease granted onto this particular area before we can do anything, either develop it as a standalone or indeed look at it as a trucking proposition.
Now, I think that Perseus has some history in doing this, and I would just reflect back on the acquisition of Amara back in 2016. Now, when we acquired Amara, we did then go into a program where we did resource delineation drilling and very specific studies in order to come up with a feasibility study and then a development plan. And we'll be following a similar process here.
I'm not suggesting that the timeline for the development of Yaouré is the same as the timeline here. It's not because it's a very different scale of a business, and this is perhaps more in the nature of an incremental bolt-on rather than anything else.
But at this stage, it's premature to be pegging down the timeframe. We are very, very excited by the exploration potential on these tenements, and once we start to drill, we'll take as long as it takes to turn this into a very viable resource or reserve that we can monetize for our shareholders.
Thank you. The next question comes from Kate at Citi. Firstly, she's asked, "If the Bagoé has a component of primary mineralization, how are you thinking about handling that?" And then secondly, "What are the next steps from here? Is it exploration, feasibility studies? What are some key milestones the market can look forward to?
Okay, well, look, I didn't quite hear what the first part of the question was, but perhaps if you could just repeat that.
No problem. So, she was saying that, "If the Bagoé has a component of primary mineralization, how are you thinking about handling that?
Yeah, well, I think, I mean, I'll just add a bit onto that, and Jeff, you can add anything. The weathering profile in the area is well developed, so there's a significant component of our resource that is oxide resources at plus two grams per ton in our resource, and I think Perseus has demonstrated how profitable that sort of material can be at Sissingué.
And then there'll be further metallurgical test work undertaken on the fresh mineralization to see how ultimately that could be processed at Sissingué or elsewhere, I'd imagine.
I think that's exactly right. I mean, what is in the public domain is some estimated recoveries on the various ore types on both the oxide transitional and fresh material, and of course, we've taken note of that in our evaluation of the resource.
However, in terms of the quality of metallurgical information, it is fairly small at the moment, and we would be wanting to do a lot more testing before we make any specific plans. And clearly, the grade is very important there, and of course, the grade recovery trade-off is a key element of the ore body as to how economic it's going to be going forward.
Now, certainly, I think the majority of the material that was delineated in a resource was either fresh or, sorry, was either oxide or transitional, so with some fresh material in there.
But this is the sort of thing that we need to really understand fully before we go too far down the track here. And so, as I said in answering the first question, the work starts basically today, but we do have a fair amount of work ahead of us before we can start to talk about specific outcomes.
And what we will do as we drill and as we do various tests and as we form our views around feasibility, etc., etc., we'll obviously release that to the market, and as part of that, we'll be putting out updated life-of-mine plans for the Sissingué operation as we come to understand what the potential of this acquisition really is.
Thank you, Jeff. There's no further questions, so I'll just hand back to yourself and Justin for closing remarks.
Okay, well, Justin, do you have any closing remarks there from you?
Yeah, I mean, speaking on behalf of the Exore Board, I mean, we're very pleased to be able to reach this agreement and recommend this to our shareholders. We've talked about the benefits, and we look to work with Perseus over the coming two or three months and our shareholders to try and expedite this closure of this transaction as quickly as possible.
Thank you. And from our perspective, we're delighted to have been able to get to this point. We do think that there is enormous potential in the north of Côte d'Ivoire, and we think that there's tremendous potential to monetize the mineral resources that are up there and create very significant value for our shareholders.
And we look forward to bringing you further news on that as we advance towards that goal. So, thank you very much for your attendance. We do appreciate that, and you can see from the slide that's currently on the screen the contact details of both Justin and myself and Andrew Grove, in my case, who is our head of BD and IR, and Justin, CFO and company secretary.
If people have further questions that they would like to put to us, then either by email or contacting us directly, we'll be more than happy to share our thoughts to the extent we can. Thank you very much, and good morning.
Thank you.