JOHANNESBURG (miningweekly.com) – Dual-listed gold miner Perseus Mining has made a positive start to 2017, with 48 655 oz of gold produced in the quarter ended March 31.

Production for the quarter was 51% higher than that produced in the December 2016 quarter, with the Edikan mine, in Ghana, on track to achieve its production guidance of 90 000 oz to 110 000 oz for the six months to June 30. 

“To put this quarterly production and the turnaround into perspective, this is the best quarter we have achieved since June 2015,” Perseus CEO and MD Jeff Quartermaine commented in a conference call from London, on Wednesday.

Edikan’s all-in site costs (AISC) of $1 098/oz were also 41% lower quarter-on-quarter, with the mine on track to achieve its interim AISC guidance of $1 000/oz to $1 220/oz. 

Gold sales for the period were 55 532 oz at an average price of $1 266/oz, which were also “well above” the 22 431 oz sold at an average price of $1 115/oz in December.

“The March quarter . . . has certainly vindicated my optimism and, if anything, it has increased my confidence in Perseus’s future, because not only have we got it back on track at our all-important Edikan operation but, as promised, we have also ticked off . . . key milestones that are very important in terms of laying the foundation for a very positive future for Perseus,” Quartermaine said.

He added that Perseus was looking forward to delivering improved production in the coming quarters.

Production costs for the period, which include all mining, including waste stripping, processing and general and administrative costs, but which excludes royalties, amounted to $957/oz – about 37% below the December 2016 quarter’s production costs. 

Unit processing costs incurred during the period decreased by 24% to $8.95/t milled from $11.70/t milled in the previous quarter. This was largely a result of the 30% increase in the tonnes of ore processed. 

The performance of the processing plant at Edikan also improved materially, relative to the September and December 2016 quarters, with the amount of ore processed during the quarter the highest amount ever achieved in a single quarter since production began at Edikan in 2011. The run-time of the mill also reached an all-time quarterly record. 

During the quarter under review, Perseus also completed the re-estimation of Edikan’s mineral resources and ore reserves. Estimating techniques better suited to Edikan’s complex geology were used that resulted in a relatively insignificant change in contained gold, Quartermaine noted. 

Edikan’s life-of-mine (LoM) plan was updated based on the re-estimated ore reserves. The updated plan forecasts production of 240 000 oz/y at an AISC of $875/oz for the next five years. 

However, Perseus is “doing its best” to extend Edikan’s LoM beyond the current plan, Quartermaine said, adding that it has conducted further exploration around the Edikan mine and was awaiting the results.

Perseus will, in the June quarter, continue to implement improved grade control practices at Edikan, while investigating potential opportunities for improvements in grade estimation.

It will also assess exploration targets and prepare drill programmes for targets identified by the recent review of geological datasets relating to the Edikan mining leases. 

SISSINGUÉ DEVELOPMENT 
Meanwhile, development of Perseus’s Sissingué gold mine, in Côte d’Ivoire, was 42% complete by March 31, and remains on track to produce first gold in the March 2018 quarter.

Perseus spent $12-million on development activities during the quarter under review, bringing total expenditure, including the early works, to date, to $55-million. 

The contractor’s construction team has progressed with the bulk concrete works associated with the plant and installation of underground services is well under way. On-site work on the construction of the airstrip, tailings dam and mine camp has also continued to progress in line with the project’s master schedule during the quarter and is expected to be completed in the June quarter. 

The forecast cost to complete Sissingué’s development remains $61-million, which will be funded from existing cash and a $40-million project debt facility provided by financial institution Macquarie Bank.

An updated LoM plan was also prepared for Sissingué, assuming ore reserves from each of the Sissingué, Bélé East and Bélé West mineral deposits would be processed through the Sissingué processing facility.

“The estimated gold production of 80 000 oz/y at an AISC of $624/oz is predicted for the first 3.25 years of operation, or [production is estimated to average] 70 000 oz/y at an AISC of $628/oz over the currently estimated five-year mine life,” Quartermaine said.

The plan also forecasts strong positive after-tax cash flow of nearly $104-million, resulting in an ungeared, after-tax internal rate of return of about 28% and a capital payback period of about 39 months. This is taking into account existing hedging and assuming a flat spot gold price of $1 200/oz. 

“It’s a smallish project, but it is a fairly economically robust project,” Quartermaine stated.

YAOURÉ GOLD
During the quarter under review, work on preparation of the definitive feasibility study (DFS) for the Yaouré gold project, in Côte d’Ivoire, progressed slightly behind schedule owing to delays in completing land access negotiations, Quartermaine acknowledged.

However, the resource drilling programme progressed well during the period and was 80% complete by quarter-end. Work has started on resource modelling, metallurgical testwork and assessment of mining, processing and infrastructure options as part of Stage 2 of the DFS. This stage is due to be completed in the June quarter. 

The resource definition drilling comprises 48 000 m of infill diamond and reverse circulation (RC) drilling. The RC drilling includes grade control drilling in targeted areas and is designed to enhance Perseus’s confidence in the existing mineral resource estimate, as well as examine opportunities for incremental expansion of the resource.

Completion of the DFS is scheduled for October. As part of this process, a new mineral resource will be published early in the September quarter. 

Quartermaine reiterated that Perseus is fully funded to pay for the development of its second mine, Sissingué, and that the company has a credible plan to fund Yaouré from a mix of internally generated cash and corporate debt finance.

“If, by chance, we don’t generate cash at exactly the rate we are planning, by the time we want to start Yaouré, we have the option of deferring the start date of construction until we do have the money,” he said.