Subject: MINING EXPLORATION UPDATE
Perseus Mining Limited: Activity Report for March 2017 Quarter
PERTH, WESTERN AUSTRALIA--(Marketwired - April 11, 2017) -
NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
Perseus Mining Limited ("Perseus" or the "Company") (TSX:PRU)(ASX:PRU) reports on its activities for the three month period ended March 31, 2017 (the "Quarter"). An executive summary is provided below. However, full details of activities in the March Quarter, including reconciled production and all-in site cash costs, are included in the Company's March 2017 Quarterly Activity Report released to the market on April 12, 2017. The full report is available for download from www.perseusmining.com, www.asx.com.au and www.sedar.com.
Edikan Gold Mine ("Edikan") Operations
- Quarterly gold production of 48,655 ounces exceeded December 2016 Quarter production by 51% placing Edikan on track to achieve its June 2017 Half Year production guidance of 90-110,000 ounces;
- All-in site costs ("AISC") of US$1,098/ounce, were 41% lower than in the December 2016 Quarter, placing Edikan on track to achieve June 2017 Half Year AISC guidance of US$1,000 to US$1,220/ounce;
Table 1: Key Performance Indicators
| Parameter | Units | December 2016 Quarter |
March 2017 Quarter |
| Recovered Gold | Ounces | 32,223 | 48,655 |
| Production Cost | US$/ounce | 1,526 | 957 |
| All in Site Cost | US$/ounce | 1,847 | 1,098 |
| Gold Sales | Ounces | 22,431 | 55,532 |
| Av. Sale Price | US$/ounce | 1,115 | 1,266 |
- Re-estimation of Edikan's Mineral Resources and Ore Reserves was completed using estimating techniques better suited to Edikan's complex geology, resulting in a relatively insignificant change in contained gold;
- Edikan's Life of Mine Plan ("LOMP") was updated based on the re-estimated Ore Reserves. This updated plan forecasts average annual gold production of 240,000 ounces at an AISC of US$875 per ounce for the next five years;
- The updated LOMP also forecasts strong positive after tax cash flow of nearly US$403 million (or A$0.52per share) from January 1, 2017 (assuming existing hedge book and a flat spot gold price of US$1,200 per ounce).
Sissingué Gold Project ("Sissingué")
- Development of Sissingué was 42% complete by Quarter-end. The mine remains on track to produce its first gold in the March 2018 quarter;
- US$12 million was spent during the Quarter on development activities bringing total expenditure to date (including early works) to US$55 million;
- The forecast cost to complete Sissingué's development of US$61 million will be funded by existing cash and US$40 million of project debt finance provided by Macquarie Bank under agreements reached during the Quarter;
- Maiden Mineral Resources and Ore Reserves were estimated for the Bélé East and Bele West deposits and an Ore Reserve estimated for the Sissingué deposit based on Mineral Resources re-estimated in December 2016;
- An updated LOMP was prepared for Sissingué, assuming that Ore Reserves from each of the Sissingué, Bélé East and Bélé West mineral deposits would be processed through the Sissingué processing facility;
- Estimated annual gold production of 80,000 ounces at an AISC of US$624 per ounce is predicted for the first 3.25 years of operation, or 70,000 ounces at an AISC of US$628 per ounce over the currently estimated 5 year mine life.
- The LOMP forecasts strong positive after tax cash flow of nearly US$104 million (or approximately A$0.13 per share) resulting in an ungeared, after tax internal rate of return of approximately 28% (real) and a capital payback period of approximately 39 months assuming existing hedging and at a flat spot gold price of US$1,200 per ounce.
Yaouré Gold Project ("Yaouré")
- Land and crop compensation negotiations were completed subsequent to the end of the Quarter enabling access to the entire Yaouré project site for drilling and future construction and operating activities.
- A planned 48,000m Mineral Resource confirmation drilling programme was 80% complete at Quarter end. Early drill results are encouraging with a number of probable new structures associated with the Yaouré deposit being defined. The drilling results will be incorporated into an updated Mineral Resource estimate that is now scheduled for completion early in the September Quarter.
- The forecast completion date of the DFS has been adjusted to reflect delays in gaining full land access for drilling and is now scheduled to be completed early in the December Quarter. The forecast total cost of the DFS remains unchanged at US$8 million.
Corporate
- Cash (A$50.4 million) and bullion (A$13.7) million totalled A$64.1 million at March 31, 2017, A$3.4 million less than the December 31, 2016 balance of A$67.5 million after expenditure on Sissingué development, exploration and corporate expenditure;
- Gold forward sales at Quarter-end totalled 159,022 ounces at a weighted average price of US$1,275/ounce;
- A US$20 million working capital facility was established and drawn during the Quarter. Drawdown of an additional US$40 million project debt facility intended to fund the development of Sissingué, is planned to occur in the September 2017 quarter;
- A payment of US$15 million was made to Bayswater Contract Mining ("BCM") during the Quarter, this being the final instalment of a US$20 million settlement of a legal dispute between Amara Mining plc ("Amara"), who was acquired by Perseus in 2016, and BCM.
PROGRAM FOR JUNE 2017 QUARTER
Edikan
- Produce gold at a total all-in site cost that is in line with June Half Year guidance;
- Continue to implement improved grade control practices and investigate potential opportunities for improvements in grade estimation;
- Continue training of operating and maintenance staff;
- Continue to implement business improvement initiatives across all departments at Edikan; and
- Assess exploration targets and prepare drill programmes for targets identified by the recent review of geological datasets relating to the Edikan mining leases.
Sissingué
- Continue construction of Sissingué in line with schedule and budget;
- Finalise the project debt facility required under the project funding plan; and
- Continue drilling at the Papara prospect and (subject to available funding) the Katara prospect with the aim of determining the potential for additional Mineral Resources which could be processed at the Sissingué processing facility.
Yaouré
- Advance work on preparing a bankable DFS for Yaouré, including:
- Completion of the resource definition drilling program designed to confirm Mineral Resource estimates;
- Completion of the metallurgical test work program to be used for optimisation of the process flow sheet and project scale; and
- Assessment and narrowing of mining, processing and infrastructure options in readiness for delivery of the final Mineral Resource estimates, which will then be used to determine the optimum project.
Jeff Quartermaine, Managing Director and Chief Executive Officer
Competent Person Statement:
All production targets for Edikan and Sissingué referred to in this report are underpinned by estimated Ore Reserves which have been prepared by competent persons in accordance with the requirements of the JORC Code.
The information in this report in relation to Edikan Mineral Resource and Ore Reserve estimates was first reported by the Company in compliance with the JORC Code 2012 and NI 43-101 in a market announcement released on February 21, 2017. The Company confirms that it is not aware of any new information or data that materially affect the information in that market release and that all material assumptions underpinning those estimates and the production targets, or the forecast financial information derived therefrom, continue to apply and have not materially changed. The Company further confirms that material assumptions underpinning the estimates of Ore Reserves described in "Technical Report - Central Ashanti Gold Project, Ghana" dated May 30, 2011 continue to apply.
The information in this report that relates to Mineral Resources for Sissingué was first reported by the Company in compliance with the JORC Code 2012 and NI 43-101 in a market announcement released on December 15, 2016. The information in this report that relates to Mineral Resources for Bélé was first reported by the Company in compliance with the JORC Code 2012 and NI 43-101 in a market announcement released on February 20, 2017. The information in this report that relates to Ore Reserves for the Sissingué and Bélé was first reported by the Company in compliance with the JORC Code 2012 and NI 43-101 in a market announcement released on March 31, 2017. The Company confirms that it is not aware of any new information or data that materially affect the information in that market release and that all material assumptions underpinning those estimates and the production targets, or the forecast financial information derived therefrom, continue to apply and have not materially changed. The Company further confirms that material assumptions underpinning the estimates of Ore Reserves described in "Technical Report - Sissingué Gold Project, Côte d'Ivoire" dated May 29, 2011 continue to apply.
Caution Regarding Forward-Looking Information:
This report contains forward-looking information which is based on the assumptions, estimates, analysis and opinions of management made in light of its experience and its perception of trends, current conditions and expected developments, as well as other factors that management of the Company believes to be relevant and reasonable in the circumstances at the date that such statements are made, but which may prove to be incorrect. Assumptions have been made by the Company regarding, among other things: the price of gold, continuing commercial production at the Edikan Gold Mine without any major disruption, development of a mine at Sissingué and/or Yaouré, the receipt of required governmental approvals, the accuracy of capital and operating cost estimates, the ability of the Company to operate in a safe, efficient and effective manner and the ability of the Company to obtain financing as and when required and on reasonable terms. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which may have been used by the Company. Although management believes that the assumptions made by the Company and the expectations represented by such information are reasonable, there can be no assurance that the forward-looking information will prove to be accurate. Forward-looking information involves known and unknown risks, uncertainties, and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any anticipated future results, performance or achievements expressed or implied by such forward-looking information. Such factors include, among others, the actual market price of gold, the actual results of current exploration, the actual results of future exploration, changes in project parameters as plans continue to be evaluated, as well as those factors disclosed in the Company's publicly filed documents. The Company believes that the assumptions and expectations reflected in the forward-looking information are reasonable. Assumptions have been made regarding, among other things, the Company's ability to carry on its exploration and development activities, the timely receipt of required approvals, the price of gold, the ability of the Company to operate in a safe, efficient and effective manner and the ability of the Company to obtain financing as and when required and on reasonable terms. Readers should not place undue reliance on forward-looking information. Perseus does not undertake to update any forward-looking information, except in accordance with applicable securities laws.
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