Perseus Mining (PRU)

[JBmurc]

when you go over the above post fundamentals then put these charts >> into the picture ....makes me want to BUY more



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[h2so4]

Just waiting for you JB. Cash yield is just over 2. Cheap as

[JBmurc]

Yes I think PRU will get some serious buyer interest over the next year ...far to cheap compared to it's peers..upload_2015-10-15_9-28-49.png

[JBmurc]

Perseus Mining's September-Quarter Was Pretty Strong And Boosted The Working Capital Position

Nov. 28, 2015 2:05 AM ET | 2 comments | About: Perseus Mining Ltd (PMNXF)
Disclosure: I am/we are long PMNXF. (More...)



Summary

Perseus Mining had an exceptionally strong quarter on the back of a good production result and selling gold at a 10% premium.
This allowed the company to generate a positive free cash flow and add cash to the balance sheet, despite spending money at Sissingué.
The performance will weaken though, as the average hedge price of the gold is roughly 5% lower.
The company remains in an enviable position as its working capital is now approximately equal to its market capitalization.

Introduction

Seeking Alpha readers who have been following me and my articles for quite a while will undoubtedly know I have become cautiously optimistic about Perseus Mining (OTCPKMNXF) which is operating the Edikan gold mine in Ghana. The company has turned a corner and after several years of overpromising and underdelivering, the times have changed and the mine is now free cash flow positive. For now.
[​IMG]
PRU data by YCharts
Perseus Mining has more liquid listings on both the Toronto Stock Exchange and the Australian Stock Exchange where the company is listed with PRU as its ticker symbol. The combined average daily volume on both exchanges is approximately 3.3M shares, so I would suggest you to use one of both platforms to execute your trades in Perseus Mining.
Perseus Mining seems to be cashing up

Perseus Mining described its first quarter of the financial year 2016 (which ends in June next year) as 'sound', and not only do I tend to agree with this statement, I also think it's an understatement. The quarterly production was almost 45,000 ounces which effectively means the company is on track to meet the production guidance for the first half of this financial year. Not only will the production guidance be met, the cost guidance might actually be proven to have been quite conservative. The all-in site costs in Q1 FY 2016 were $1060/oz and that's lower than the $1100 the company had been guiding for.
There was an additional positive surprise as the entire quarterly production had been hedged at $1291/oz, resulting in a much higher operating margin than what Perseus would have achieved without hedges. This also confirms my thesis that hedges aren't per definition 'bad' (which is the general point of view of the markets these days). It could be worthwhile to hedge a part of the intended output at a decent price which is what Perseus effectively has done.
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Source: financial statements
The company's total revenue was A$81.6M ($58M), resulting in a pre-tax income of A$39.5M ($28M) and a net income of A$35.8M ($25.5M) in the first quarter and not only is this 'pretty good', it's also better than last year on the back of a decent production performance and a weaker Australian Dollar (Perseus is selling its gold in USD but reporting its financial statements in the weaker Australian Dollar).
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Source: financial statements
The cash flows were also very strong with an operating cash flow of A$14.7M ($10.5M) of which A$9.8M ($7M) was spent on exploration, equipment and 'acquisition of assets under construction'. As the latter is much higher than in the corresponding period of the previous financial year, I'd hope this also already includes some expenses made for the new Sissingué gold mine in Ivory Coast. No official breakdown has been given, but as the sustaining capex per produced ounce of gold in Ghana was $83, it looks like the sustaining capex was less than half of the total amount the company has spent on capital expenditures.
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Source: press release
Additionally, it looks like Perseus Mining has been able to push forward with some additional cost savings, and the mining and processing/maintenance expenses fell by respectively 50% and 23%, boosting the financial performance.
The strong balance sheet will be needed to fund the construction of its newest mine

The strong free cash flow in the first quarter resulted in a very welcome boost of the company's working capital position. Not only did the working capital increase to A$191M ($137M), the cash position also jumped by 20% to A$123.4M ($88M) as of at the end of September.
That's great and not only does this mean Perseus Mining's market capitalization is now approximately the same as its working capital position, the increased cash component of the working capital will be very helpful to contribute to the funding mix to finance the new Sissingué mine in Ivory Coast.
Keep in mind Perseus' financial results will be weaker in the next few quarters (and years) as the current spot price of gold is lower, whilst the impact from the positive excellent hedging strategy will be lower (the remaining hedge book consists of hedges at $1240/oz, approximately 5% lower than the hedged price in Q1 FY 2016). This could be compensated for by an expected production increase and production cost decrease, in line with the official guidance.
(click to enlarge)[​IMG]
Source: company presentation
Investment thesis

Even after what's supposed to have been a 'difficult' start of the financial year 2016, I remain positive about Perseus Mining as the company generated a substantial amount of sustaining free cash flow (in excess of US$7.5M, after deducting the growth capex at the Sissingué mine). The company isn't doing anything stupid with this cash and just keeps it in the bank account as it knows it will be useful to fund the development of the Sissingué project.
I'm starting to consider Perseus Mining as an interesting potential buyout target for any producer trying to get exposure to Africa. The Edikan Mine should really see a performance boost from 2018+ on whilst the Sissingué mine in Ivory Coast is supposed to have a low production cost. Perseus Mining remains relatively high on my 'tax loss selling season' priority list.​

[JBmurc]

and onwards PRU moves ...yet another I would have loved to have loaded up at 38c ....present 64.5c ..and looking bullish

[babymonster]

Same here, try to buy some a few times but... Anyway. Sar as well.. Bought at 40 sold at 60 but now. .........

[JBmurc]

PRU been crushed of late ....31.5c ......

selling of PRU overdone.....
http://www.fnarena.com/index2.cfm?ty...C2ED3282B3062C

[JBmurc]

UBS Global Research 19 July 2017
Perseus Mining Limited
Edikan delivers, so why the steep discount to NPV?

When will market confidence return? Trading at 0.4x P/NPV
Perseus is delivering on its targeted All-In Sustaining Cost at Edikan and production is
lifting. So why is Perseus still trading at 0.5x P/NPV? We think the market is 1) under
estimating the operational turnaround at Edikan; 2) cautious towards the asset's cash
generation of ~US$9m/quarter; 3) questioning the merits of the Sissingué project and
4) focusing on the move to a peak net debt position of A$30m by the end of FY18. In
FY18, cost stability and lifting production at Edikan should support a re-rating but
caution towards the ramp up of the Sissingué mine is likely to prove an overhang. In
addition, with so many domestic choices for local investors, the re-rating could be
slower than expected.

June quarter costs hold at US$1,100/oz; FY18 production to lift 30% y/y
Perseus has delivered an interruption free June quarter, with production lifting 6% q/q
to 51.6koz (UBS-e 48koz). Most importantly, the All-In Sustaining Cost has maintained
q/q at US$1,100/oz (UBS-e US$1,101/oz) and this is down 28% y/y. In FY18, we look
for Edikan production to lift 30% to 233koz, supported by grades edging towards
1.2g/t. This results in the AISC edging down to US$1,024/oz.

Neutral - A re-rating will likely depend on AISC consistency
Perseus' Edikan mine has delivered another profitable quarterly result (see note). From
here, a pattern of delivering on guidance and keeping the AISC low is still needed for a
re-rating to take place. At 0.4x P/NPV we believe there is genuine value in PRU,
however country risk, operational dependability at Edikan and ramp up risk a Sissingué
is likely to keep PRU at a discount to NPV, for now. If the AISC continues to decline and
maintain, we might consider reducing the discount applied to our target price. At 0.75x
P/NPV, our price target would lift to A$0.44/sh, all else remaining equal.

Valuation: A$0.59/sh (DCF, 12% discount rate)
We update for the quarterly result. We risk weight Yaoure to 0.5x P/NPV, equivalent to
A$0.14/sh. We value Edikan at A$0.31/sh, we think the market is just paying for Edikan
with no value for Sissingué and Yaouré. An updated DFS for Yaouré is due in the
December quarter.

Has Edikan achieved cost stability?
Perseus has delivered an interruption free June quarter, with production lifting 6%
q/q to 51.6koz. Production has benefited from stable milling rates, improving
grades and lifting recoveries. We expect this trend to continue.
Most importantly, this has helped to keep the All-In Sustaining cost flat q/q at
US$1,100/oz and this is down 28% y/y.

Earnings change summary
We update for the quarterly result. We risk weight Yaouré to 0.5x P/NPV (prev.
1.0x P/NPV), equivalent to A$0.14/sh. We value Edikan at A$0.31/sh, we think the
market is just paying for Edikan with no value for Sissingué and Yaoure.
FY18 guidance is for 250-285koz at an AISC of US$1,015/oz. This includes
production from Sissingué, which commences in the March quarter of 2018.
There is no detailed breakdown of guidance by asset, but we expect production
from Edikan to be weighted to the June half year with production benefiting from
higher grade fresh ore from the Fobinso pit. This material also drives a higher
recovery.
We look for Sissingué to achieve nameplate production early in the JQ18, and we
forecast FY18 production of 18koz. This increases to 76koz in FY19.