PMNXF (PMNXF) Q1 2027 Earnings Report, Transcript and Summary

Good morning, and welcome to the Perseus Mining Investor Webinar and Conference Call. [Operator Instructions] I'll now hand over to Perseus Mining Managing Director and CEO, Craig Jones. Thanks, Craig.

Yes. Thanks, Nathan, and welcome to Perseus Mining quarterly webinar to discuss our September 2026 quarter report. I'm joined on the call today by our Chief Financial Officer, Lee-Anne de Bruin. And this quarter marks the beginning of the 2027 financial year, and it's been another period of strong operational delivery from our 3 operating gold mines with strong cash generation, along with the continued progress of our inorganic growth projects. I'll take you through the operating results first before handing over to Lee-Anne for the financials. I'll start with safety. From the 1st of July, our total recordable injury frequency rate was 1 for the quarter, and our lost time injury frequency rate remains at 0. At Nyanzaga, the team has now worked more than 10.9 million hours without a lost time injury, which is an outstanding result for a project which is at peak construction with over 4,200 people on site. We produced 92,551 ounces of gold, which was lower than the previous quarter, exceeded our plan and takes into account the planned maintenance shutdowns at each of the assets and face positions of our pits. The average production costs were USD 1,472 per ounce, delivering an all-in site cost of USD 2,035 per ounce. Gold sales from the 3 operations totaled 99,661 ounces at a realized gold price of USD 3,881 per ounce, delivering a notional cash flow of USD 171 million. We finished the quarter with $900 million in cash and bullion, 0 debt and a further $400 million in undrawn debt facilities, and Lee-Anne will take you through the cash movements shortly. Moving to the individual sites and starting with Yaoure. The biggest milestone for the quarter was that the CMA underground achieved commercial production as of the 1st of July. The underground performed well, and the ore mined increased 40% -- 46% on the June quarter to 131,000 tonnes at 2.63 grams a tonne. And the underground produced 9,658 ounces, which was up 14%. Yaoure's overall production was 36,648 ounces in total, which included around 27,000 ounces from the open pits and the 9,658 ounces from the underground. Whilst this was lower than the June quarter, it was in line with our plan with lower mill run time due to major plant maintenance shutdowns. Overall production is expected to increase in the second half of the year as the open pit accesses higher grades and production continues to increase from the underground with increases in both mine tonnes and grade. The all-in site costs of $2,393 per ounce was slightly above plan, and that's mainly due to better-than-planned performance in the open pit, which gets us ahead on our stripping in the pit. We sold 40,009 ounces at USD 3,845 an ounce, producing a notional cash flow of $53 million. At Edikan, we produced 35,830 ounces, which was in line with expectations. The head grade was lower than the last quarter at 0.67 grams a tonne, mainly due to pit sequence and run time was also lower due to scheduled maintenance, and that was partially offset by higher throughput rates that were achieved in the mill. The all-in site costs fell 11% to $1,738 an ounce due to lower royalties associated with softer gold price and an over accrual of royalties from the previous quarter. We sold 35,995 ounces at an average price of $3,968 an ounce, and Edikan generated the highest margin for the group at $2,230 an ounce and contributed $80 million in notional cash flow. The Fetish and Esuajah North cutbacks are progressing to plan. We moved 6.7 million tonnes of waste in the quarter and spent $22.5 million of capital, bringing the total spend to date on those cutbacks to $27.6 million. Sissingue produced 20,073 ounces, which exceeded plan. So another good quarter for Sissingue. Quarter-on-quarter, the production is lower due to lower mill run time associated with planned maintenance and lower head grade, offset by higher throughput rate and recovery. This is associated with the higher proportion of oxide material that was processed from the Antoinette pit. The all-in site cost was $1,913 an ounce, which was up on the June quarter, reflecting lower production volumes, partially offset by lower royalties. We sold 23,657 ounces at $3,811 per ounce, producing a notional cash flow of $38 million. So we had a good start to the year, placing us well on track for our production and cost guidance. We expect the group production between 420,000 and 480,000 ounces for the year at an all-in site cost of between $1,835 and $2,070 an ounce. Group all-in site cost for the quarter was in the guidance range for Edikan and Sissingue were both on their site ranges and Yaoure was slightly above for the reasons I explained just earlier, and we do expect the grades to improve. The guidance includes 55,000 ounces from Nyanzaga, which comes into production in January. And our cost guidance assumes a gold price of $4,000 an ounce. The other thing to note is Nyanzaga isn't included in our cost guidance as its operating costs are capitalized until commercial production in the June quarter of 2027. I'll hand over now to Lee-Anne, and she'll talk through the financial aspects of the quarter.

Thanks, Craig, and morning to everybody. The continued performance of our site, coupled with strong gold price has allowed us to further strengthen our balance sheet. Our net cash and bullion position ended the quarter at USD 900 million, and this is after ongoing investment in our growth projects across the business. And the liquidity position of the business sits at $1.3 billion with our undrawn debt facility of USD 400 million. The liquidity excludes -- sorry, this liquidity excludes $338 million of liquid investments in relation to our investments in PDI Gold and in Aurum. Moving on to our return capital -- returning capital to shareholders. Our balance sheet strength has allowed us to continue to return capital to shareholders. During the quarter, the Board approved, as you're aware, an on-market buyback of up to AUD 350 million. By the end of September, we had bought back just over 1 million shares for about AUD 6.6 million. And this takes into account the fact that we've had 1 month of nontrading due to trading blockouts. Perseus is also proposing a AUD 100 million special distribution equating to about $0.0754 per share, which will be funded from the funds received on the sale of the Sudan project. The Notice of Meeting released last Thursday seeks approval for a capital reduction of up to AUD 70 million or AUD 0.0528 a share with the balance to be paid as a special dividend. The shareholders will vote at the AGM on the 30th of November with the record date being set for the 18th of December and payment for the 29th of December. An application to the ATO for a class ruling has been submitted on what portion will be declared as a capital reduction versus a special dividend. On the quarterly cash and bullion movements, focusing on the cash flows and then the capital allocation for the September quarter, the closing balance of $900 million was after operational cash flows of $187 million. Capital investment in our growth projects for the quarter of about $155 million, of which $110 million was spent in progressing the Nyanzaga Gold project as our teams worked furiously and safely to progress towards gold pour in January '27. There was a further $3.1 million spent in infrastructure elements of the CMA underground project with commercial production being declared for the project on the 1st of July 2026. And as Craig alluded to, we spent $22.5 million progressing the Edikan cutbacks. As you know, we're going to be spending $70 million to $80 million on exploration this year. This quarter was a quarter of setup and progressing drilling contracts, and we had spent about $5 million on ongoing exploration drilling at the asset, which will ramp up over the next 9 months. Continued contributions to our host countries with $56 million being paid in government dividends during the quarter and $27 million paid in corporate income taxes and withholding taxes. And then we did -- as I said earlier on, we had the continued returns to our shareholders with the $5 million contributed towards the buyback in the September quarter. Just then focusing on the reconciliation between our all-in site costs to our all-in sustaining cost. The graph you see in front of you just sets out this reconciliation between the Perseus based all-in site cost, which is more cash based of $2,035 per ounce versus the World Gold Council disclosure of all-in sustaining cost metric of $1,855 per ounce. Key differences attributable in this reconciliation are the produced versus sold metric or basis for the calculation and accelerated mining at Yaoure, which resulted in the buildup of lower-grade stockpiles taken to inventory. I'll hand back to Craig now to take everyone through the update on the Nyanzaga project.

Thank you, Lee-Anne. So our Nyanzaga project is progressing well and rapidly moving towards production from January next year. The project is 88% complete and remains on budget and schedule for first gold in January. We've incurred $407 million, of which is 84% of the $483 million budget, plus $33 million in capitalized preproduction costs. All major procurement is complete and all site installation contracts have been awarded. We've made some important progress this quarter with the commissioning team mobilized to commence commissioning in the coming period and operational personnel preparing for ramp-up. Construction of the front end of the processing plant is nearing completion with ore expected through the primary crusher to the coarse ore stockpile in the coming period. In terms of the process plant, the ring gears and motors are installed on both the mills and the CIL tanks are complete with top of tank steelwork progressing. The 220-kilovolt grid connection is progressing well with control buildings nearing completion and the line stringing underway, along with the backup power station with all 28 generators installed. Foundations are nearing completion and the electrical installation progressing. The tailings dam construction remains ahead of schedule with all 3 embankments complete. The HDPE liner installation is 88% complete as of the end of June, and the drainage works are nearing completion. And the mining pre-strip achieved the FID budgeted target of 4.6 million BCMs at the end of September with first ore mined and stockpiled. Mining remains on target to achieve the previously announced preproduction target of 7 million to 8 million BCMs by January. With regards to our sustainability performance, I'd like to start with safety because that underpins everything we do. We continue to record 0 lost time injuries across the group, and our total recordable injury frequency rate for the quarter was 1. And these are solid results. However, we continue our focused attention on fatality risk management, safety leadership and culture across our operations. As far as our social performance is concerned, we distributed $407 million in economic value to our host countries this quarter, including $244 million in local procurement and $109 million in government payments. Our $1.2 million invested in community initiatives focused on strengthening local capabilities and creating pathways to economic opportunity with a particular emphasis on youth employment, entrepreneurship and enabling local businesses to participate in wider supply chains. So to sum it up, it was a solid quarter for Perseus. The CMA underground is in commercial production. Nyanzaga is on track for first gold in January, and our balance sheet is strong and debt-free, and that funds our growth, continuing shareholder returns through the buyback and special distributions. With production building in the second half and Nyanzaga coming online, FY '27 is set to be a transformational year for Perseus, and I'd like to thank our employees and contractors across our sites for all their efforts. So thank you all for joining us today, and I'll open the floor up to questions.

[Operator Instructions] Your first question comes from Regan Burrows at Macquarie.

Congratulations on a good quarter. Just on the CMA underground ramp-up. Firstly, I guess, a grade sort of reconciling with the plan that you have there. And those improvements over the remainder of the financial year, how much of that's going to be driven by grade versus volume?

Yes. Thanks for the question, Regan. It's both. So we continue to ramp up the tonnages through the course of the year to the full production rates. And the grade also improves as we move into the higher-grade stopes later on in the year. So it's a combination of both.

Great. And just the other one I had was just on the Edikan cutback timing on the capital spend there. I saw you did sort of $22 million thereabouts this quarter. Do we just sort of assume that, that is mainly spread out over the remainder of the financial year from a spend perspective?

Yes. We've given cost guidance for that of around $140 million for the cutbacks this year. We are in the sort of easy, free-dig higher upper part of the pits at the moment. So your costs will increase as we get deeper due to haul distances, but also when we bring in the drill and blast activities as well. So that gives you a bit of a sort of idea of how we expect the spend to pan out.

Your next question comes from Franco Jojic at JP Morgan.

Just quickly on Nyanzaga, I was just wondering around the mining contractor, how progressed discussions are here when you eventually get into production? And I guess, when we can expect an update on this front?

Yes. Thanks, Franco. I think -- I mean, we'll give you an update when things are finalized there, but the discussions are progressing well. And it's really just a matter of completing the commercialities of that. And once we get to that point, we'll let you know. But I mean at this point in time, we're actually moving all the dirt we need to move on site and everything is on track.

That makes sense. And the only other question for me was just on the M&A outlook, how you're thinking about the potential M&A landscape and I guess, your longer-term aspirations for the portfolio more broadly, if you can talk to that as well, please?

Yes, sure, Frank. I think M&A is always a difficult one to talk to. I think it kind of -- we're obviously looking at opportunities like everyone else and assessing what's out there. At this point in time, we just -- that's where we're at. And I think there's nothing on the cards at this point in time, but we'll continue to look and see if there's something there that makes sense for our business in terms of strategy and so forth. But there's not much more to really say about that at this time.

Thank you. There are no further questions at this time. So I'll now hand back to Craig for closing remarks.

Great. Well, thanks, Nathan. And look, thanks, everyone, for your attendance. I think, like I said earlier, a solid start to the year for Perseus. Some exciting things happening with our CMA underground ramping up, reaching commercial production and Nyanzaga really is moving to an exciting time for us, and we're looking forward to bringing that into production from January. And look, thanks all for your attendance today.