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Mining
Consistency is underrated, and companies who are able to just go about their business and keep on trucking aren’t always the ones getting the most attention.
But there is a lot to be said for hitting targets, and three of the gold industry’s most consistent players have rolled out some solid numbers to keep their operations ticking over.
Perseus Mining (ASX:PRU) was among the most impressive reporters across the gold sector in September, delivering 132,804 ounces at all in sustaining costs of just US$937/oz from its network of West African gold mines.
That came despite a rough quarter at the Sissingue mine, where 766mm of rainfall across the quarter plunged the mine into a loss.
That was balanced out by a stunner at Yaoure in Cote d’Ivoire, which delivered 73,737oz at all in site costs of US$677oz and a solid quarter at Edikan in Ghana at 48,497oz at US$1078/oz.
With another US$72 million in the bank, $2.34 billion Perseus is sitting on one of the industry’s biggest war chests at US$594 million.
Where will the African supremo spend the cash?
“We do intend to continue to grow our company as and when value accretive opportunities arise and when that occurs we won’t hesitate to deploy capital accordingly,” CEO Jeff Quartermaine told investors on a webinar this morning.
“In addition in the immediate future we will continue with our existing capital management strategy of declaring a base dividend supplemented by a bonus dividend, or potential share buyback or capital return depending on the level of excess cash available when that dividend is declared.
“Under no circumstances, at least while (CFO) Lee-Anne (de Bruin) and I are at the business, will we be wasting shareholder money on poor investments and of that you can be sure. I know that is something some investors are concerned about, that we will feel compelled to spend even if the opportunities aren’t great. I can assure you that will not happen.”
Not that they’d say that about the Meyas Sand project in Sudan, where operations have been suspended due to a civil war this year. The company says security arrangements are being made to resume drilling.
Responding to questions from analysts, Quartermaine acknowledged there would be inflationary pressure from labour, contractor and consumable costs, with government imposed limits on fuel prices in Cote d’Ivoire rolling off this month.
But he also said a discount continued to be applied to the stock, which on purely financial metrics compares favourably to competitors like Regis Resources (ASX:RRL) and Evolution Mining (ASX:EVN), saying the company was mispriced because of perceived jurisdictional risk.
Gold prices were down slightly to US$1972/oz overnight, but are up strongly in the past two weeks on safe haven fears around the snowballing impact of conflict in the Middle East.
PRU received an average sale price of US$1936/oz in the September quarter, up US$3 on the June term.
That run up in gold prices will be a positive for Mark Clark’s Capricorn Metals (ASX:CMM), which chewed through the bulk of its $85.6 million FY23 profit after tax to clear out hedges on gold sold from its Karlawinda mine.
It delivered 29,700oz at AISC of $1315/oz in the three months to September 30, on track to hit FY24 guidance of 115,000-125,000oz at $1270-1370/oz.
CMM sold 24,280oz at a price of $2962/oz in the September quarter to generate $71.9m in revenue and add $23.3m to its bank balance, which now sits at $133.6m. At Karlawinda it delivered $38.4m in operating cashflow, slightly down on the $40.3m turned out in June.
Also maintaining guidance was West African Resources (ASX:WAF), owner of the Sanbrado mine in Burkina Faso, where it produced 55,768oz at US$1164/oz, selling 50,738oz for US$1932 a pop.
WAF has produced 168,776oz at US$1167/oz in 2023, on track to hit its guidance of 210,000-230,000oz at under US$1175/oz.
It plans to ramp up to over 400,000ozpa from the latter half of 2025, once its nearby Kiaka mine is in production.
“West African is on track to become a +400,000 ounce per annum gold producer with the development of our second gold mine at Kiaka. Our unhedged 10-year production outlook estimates production of more than 200,000 ounces of gold per annum in 2023 and 2024, and more than 400,000 ounces of gold per annum from 2025 to 2032,” WAF executive chairman Richard Hyde said.
$1.8 billion Capricorn is up strongly over the past year, a 12-month gain of more than 40%, but WAF and PRU have seen their share prices drop heavily despite a solid production run in 2023. Is it the African discount in action?
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