Ground Breakers: Perseus pushes button on African gold expansion
One of the ASX’s top performing gold miners in recent times, Perseus (ASX:PRU) has leveraged its successful operations in West Africa to push back against market malaise and cost pressures.
Shortly after announcing a 159% rise in net profit to $126.9m the miner is expanding into new parts of the African continent, announcing a C$215 million bid to acquire Canada’s Orca Gold.
The deal will give Perseus ownership of Orca’s 70% share in the Block 14 gold project, a ~3Moz gold deposit located near Sudan’s border with Egypt.
Constructing the mine would make Perseus a 500,000ozpa plus gold miner.
According to a feasibility study released in September 2020, Block 14 would produce gold for 13 years with over 228,000ozpa over the first seven.
It has an NPV of more than US$1 billion at a US$1900/oz gold price.
Perseus’ deal has the support of the Orca board and shareholders who own around 37% of the company’s stock.
It will comprise the C$17 million cash Perseus already paid to secure a 15% stake in Orca along with an offer of 0.56 Perseus shares for every Orca share, an offer Perseus says implies a 62.9% premium.
Perseus MD Jeff Quartermaine said the deal will help Perseus grow to and maintain a status as a 500,000ozpa miner well into the 2030s.
“The potential acquisition of Orca represents a very exciting growth opportunity for Perseus that aligns with our strategy of upgrading the size, quality and geographic distribution of our asset portfolio,” he said.
“We have the financial capacity, technical expertise, and in-country relationships, in combination with Orca’s existing management team, to bring Orca’s Block 14 Project into production and in the process, create material benefits for all stakeholders including the government and citizens of Sudan.
“When the transaction is completed, Perseus will have three operating mines currently producing gold at a rate of approximately 500,000 ounces per year and a high-quality development project that if brought on stream, as intended, should ensure that Perseus can maintain or exceed its targeted production level well into the next decade.
“With the objective of operating four mines, Perseus will be well advanced towards fulfilling its aim of becoming a highly profitable, well managed, pan-African gold company that consistently creates benefits for all stakeholders.”
Grange Resources (ASX:GRR) meanwhile soared to a 13-year high, up 36% after announcing a 58% jump in profit for 2021 to $322.26 million.
The ultra high grade Tassie iron ore miner will pay a 10c a share final dividend.
Meanwhile Sandfire Resources (ASX:SFR) was down 2.6% after announcing a US$55.2m profit.
Despite the increased profit on record revenues from its DeGrussa mine thanks to super high copper prices, Sandfire’s earnings per share took a hit from US24cps to US14.2cps on the large equity raising used to part-fund its US$1.865 billion acquisition of the MATSA copper complex in Spain.
Its dividend dropped from 8c per share last half-year to 3c per share for H1 2022.