Ground Breakers: African gold's smooth operator Perseus is heading underground

Perseus Mining to head underground at Yaoure in major life extension at Cote d’Ivoire gold mine

Whitehaven reveals interest in BHP coal mines as investors get antsy

Red 5 pops, Azure sags

The leading lights of the gold world are converging this week in Colorado Springs for the Gold Forum Americas, one of the biggest displays of precious metals in the universe.

If you’re looking for that post-Diggers news from any of your ASX gold stocks keep a close watch on the pressos coming out of the Broadmoor Hotel and Resort up near the home of the current NBA champions, Nikola Jokic’s Denver Nuggets.

Keynote speakers include the likes of the ever entertaining Robert Friedland and Franco-Nevada’s Pierre Lassonde.

All up the organisers claim to have gathered companies representing seven-eighths of the world’s gold production and reserves, making it the place to be.

And fresh out of the blocks is $2.5 billion capped West African gold supremo Perseus Mining (ASX:PRU), which has allayed any concerns investors in the 500,000ozpa gold producer may have had around the long term future of its Yaoure mine in Cote d’Ivoire.

Perseus generated one of the biggest profits anywhere in the ASX gold sector in FY23, delivering profit before tax of $568.8m.

That came on gold sales of 537,564oz at all in site costs of US$959/oz — an increase of 12% year on year with costs rising only 1%.

137,120oz came at Yaoure in the half-year at just US$786/oz, with calendar year output of 262,100-277,120oz at US$818-864/oz currently anticipated.

Another roughly 200,000oz is expected to be produced at Edikan in Ghana and around 55,000oz at Sissingue in Cote d’Ivoire.

Today’s news is that not only will Yaoure be delivering gold until 2035, a 12-year runway, it will also head underground for the first time by feeding ounces from the CMA deposit into the Yaoure mill from its development in FY26.

All told it will boost Yaoure’s output by 108,000oz a year over eight years from FY27, avoiding a major production cliff at the low cost West African gold operation, acquired as a development asset in a bottom of the market 2016 takeover of Amara Mining.

Leading mine

Perseus MD Jeff Quartermaine says further mine life extensions could come through additional drilling, with the company expecting it to live up to a reputation as one of the top mines in Cote d’Ivoire and all of West Africa.

“When Perseus acquired Yaoure as a development project in 2016, the possibility of extending the life of the mine through development of an underground operation was not part of the plan,” Quartermaine said.

“However, our discovery, and subsequent engineering and planning, that has led to today’s announcement, bears testament to Perseus’ in-house ability to create significant value through organic growth.

“An underground mine planned for Yaoure will be Perseus’ first foray into underground mining, with all previous operations having been open cut operations.

“While the underground mine represents a new style of mining and a new challenge for us as a company, it is certainly not new to many of our technical team members, who are very keen to demonstrate their skills in an underground mining setting.”

Whitehaven Coal confirms worst kept secret

Whitehaven Coal (ASX:WHC) has been forced to confirm its interest in BHP’s (ASX:BHP) Daunia and Blackwater met coal mines after disgruntled hedge fund shareholder Bell Rock’s complaints about ‘selective’ information to investors drew the miner’s ‘worst kept secret’ into the open.

There is plenty of interest for the assets, lower quality coking coal mines that sit in the 50-50 BHP-Mitsubishi Alliance in Queensland expected to fetch billions in a sale.

They are distinct from the premium hard coking coals elsewhere in the BMA business BHP still sees as core assets.

Whitehaven wants to diversify from thermal to met coal. After last year’s strange energy coal arbitrage over steelmaking coal, rising sentiment in China and among traders on its steel sector have pushed coking coal prices above US$300/t.

At the same time thermal coal is fetching around US$160/t.

Whitehaven suspended a buyback that had returned almost $1 billion to shareholders in August, something likely to last while it works out if it is successful and wants to secure the BHP mines. WHC finally confirmed its interest in Daunia and Blackwater in a release to the ASX today.

“In response to a media article in today’s Australian Financial Review newspaper, Whitehaven Coal Limited confirms it is participating in the sale process initiated by the BHP Mitsubishi Alliance (BMA) in relation to the Daunia and Blackwater metallurgical coal mines in Queensland,” the company said.

“At this point in time the process is ongoing.

“As communicated in Whitehaven’s FY23 Results Announcement on 24 August, Whitehaven’s share buy-back has been temporarily suspended while the Company is considering application of its capital allocation framework in light of growth opportunities.

“Whitehaven confirms that those opportunities include the Daunia and Blackwater mines.

“The Board will make a decision regarding resumption of the share buy-back at the appropriate time.”

It says it’ll keep the market informed “in accordance with its continuous disclosure obligations”.

The materials sector fell 0.53% as the heat of Friday’s market wore off, with Azure Minerals (ASX:AZS) down 11% on mixed results from recent drilling that returned thick chunky pegmatites from the Target 1 discovery at its Andover lithium project but narrower hits at its Target Area 2 prospect.

Red 5 (ASX:RED) meanwhile was up over 22% on a big share sale and massive volumes as speculation abounded whether Genesis Minerals (ASX:GMD) or Silver Lake Resources (ASX:SLR) could be looking at a potential bid on the King of the Hills gold mine owner.