ENP Newswire - 29 January 2014 Release date- 28012014 - Perseus Mining Limited (ASX/TSX: PRU) reports on its activities for the three month period ended 31 December 2013 . Operations - Edikan Gold Mine ('EGM'), Ghana Gold production of 48,360oz in the Quarter, 6% higher than the previous quarter. For the six months to December 2013 (the 'Half Year'), gold production totalled 94,190oz, in line with production guidance of 91,000oz to 101,000oz for the period; Total all-in site unit costs (including production, royalties, development and sustaining capital) were US$1,228 /oz during the Quarter, 8.5% less than the prior quarter. For the Half Year; all-in site unit costs were US$1,283 /oz, 2.6% higher than the upper end of cost guidance of US$1,250 /oz; Material improvements continued to be achieved during the Quarter in the availability and metallurgical performance of the process plant, as well as the unit costs of gold production; Gold production guidance for the six months ending 30 June 2014 ('the June Half Year') is unchanged at 99,000oz to109,000oz at an all-in site cost in the range of US$1,050 to US$1,250 /oz. For the full financial year ending 30 June 2014 , gold production guidance is also unchanged at 190,000oz to 210,000oz at an all-in site cost in the range of US$1,050 to US$1,250 /oz; A total of 44,617oz of gold was sold during the Quarter at an average sales price of US$1,318 /oz; Development - Sissingue Gold Project ('Sissingue'), Cote d'Ivoire Perseus remains committed to its decision to defer development of Sissingue pending an assessment of the mineral potential of the nearby Mahale prospect and / or more favourable market conditions; Exploration - Ghana and Cote d'Ivoire 28,568m of drilling completed in Cote d'Ivoire ; Significant drill intercepts from multiple prospects at the Mahale Project in Cote d'Ivoire ; Corporate Available cash and bullion of $28.2M as at 31 December 2013 (excluding $10.6M in escrow and VAT receivable); Forward sales contracts for 124,000oz of gold at a weighted average price of US$1,463 /oz were 'in the money' by approximately US$31.6M at 31 December 2013 ; Material progress made towards resolution of an outstanding VAT liability of GHC93.0M (or US$39.4M ) owed to Perseus Mining (Ghana) Limited by the Ghanaian Government. Operations Edikan Gold Mine - Ghana Summary Gold production in the Quarter amounted to 48,360oz, 6% more than in the September 2013 quarter. Total all-in site costs (including production, royalties, development and sustaining capital) were US$1,228 /oz, an improvement of nearly 8.5% relative to the September 2013 quarter. Mining A total of 2,879,791bcm of ore and waste was mined during the Quarter, nearly 12% more than in the September 2013 quarter. The ore mined included 5,614t of oxide ore at 0.6g/t gold and 1,365,183t of transitional and primary ore at 1.0g/t gold. The quarter-on-quarter increase in total material movements reflected a 25% increase in waste movements (associated with stripping of the AG Stage 3 pit) combined with a 24% decrease in the quantity of ore mined relative to the prior period. During the Quarter, the ROM ore stockpiles that include both high and low grade ore (but not mineralized waste) plus crushed ore decreased by 550,744 tonnes to 3,921,802t grading 0.5g/t gold, and containing approximately 68,321oz of gold. The reduction in stockpile reflected the plan to process stockpiled ore to offset reduced ore production while mining focused on stripping Stage 3 of the AG Pit . These ore stockpiles were made up of approximately 42% oxide ore and 58% transitional/primary ore. Approximately 5% of the stockpiled ore is classified as medium/high grade, containing greater than 0.6g/t gold, while 95% of the ore is classified as low grade containing 0.4 to 0.6g/t gold. Processing Gold production of 48,360oz during the Quarter was 6% above September 2013 quarter production, notwithstanding the fact that the head grade of ore treated (1.00g/t gold) was approximately 5% lower than in the September 2013 quarter (1.05g/t) .The reduction in head grade was in line with expectations and was a reflection of the strategy of processing a blend of ore drawn from stockpiles and the existing open pits in FY2014. The effect on production of the decreased head grade was offset by an improvement in the gold recovery rate (84.4% compared to 83.4%) and improvements in the availability and usage of the process plant, including the primary crusher, oxide circuit and SAG mill. All-In Site Costs Total all-in site cash costs (including production, royalties, investment in pre-stripping and inventory, development and sustaining capital) for the Quarter were US$1,228 /oz which was 8.5% lower than in the September 2013 quarter. This improvement in costs was the result of an 11% decrease in unit mining costs and a 7% decrease in unit processing costs. In terms of all-in site cost for the December Half Year, the improvement in unit costs achieved during the Quarter was insufficient to offset the impact of higher than expected costs in the September 2013 Quarter and as a consequence, for the December Half Year, the total all-in site cash costs (including production, royalties, development and sustaining capital) were US$1,283 /oz, slightly above the upper end of the cost guidance range for the Half Year of US$1,050 to 1,250/oz. Of the US$85 /oz spent on sustaining capital during the Quarter, approximately 50% related to payments associated with community relations activities including crop compensation committed in prior periods for areas that will be affected by mining of the eastern pits and purchase of land for relocation housing. The remaining 50% related to an assortment of expenditure relating to plant upgrades, security and site upgrade projects. This allocation of sustaining capital was very similar to that in the prior quarter. EGM Production and Cost Guidance Gold production and site cost guidance for the six months and twelve months ending 30 June 2014 remains unchanged from that previously provided to the market. Project Development Sissingue Gold Project - Cote d'Ivoire Perseus has deferred commencement of development of Sissingue pending a reassessment of the mine plan in the light of lower gold prices and clarification of a number of issues, including: 1. Finalisation of the new mining code in Cote d'Ivoire ; 2. The granting of a request to extend the date for first production specified in the Sissingue Exploitation Permit beyond August 2014 ; 3. Exploration of nearby exploration licence areas such as Mahale with the view to delineating new gold deposits that could be processed at the proposed Sissingue gold facility; 4. Complete a review of the capital and operating cost estimates for Sissingue applying current cost and revenue expectations to revise mine planning scenarios. Exploration Ghana During the Quarter, minimal amounts were spent by Perseus on exploration activities in Ghana at the EGM and on adjoining licence areas. Exploration activities were limited to geological mapping and prospecting plus data interpretation for planning of future Resource / Reserve drilling programs at the EGM. No drilling occurred during the Quarter. During the Quarter, a total of US$1.5M was spent by Perseus on exploration activities in Cote d'Ivoire as follows: Mahale Licence A total of 28,568m (16,435m September 2013 Quarter) was drilled at the Bele anomaly on the Mahale licence during the Quarter consisting of 12,871m (132 holes) of reverse circulation ('RC') drilling, 11,875m (441 holes) of scout Air Core ('AC') drilling plus 3,872m of shallow rotary air blast ('RAB') drilling to nest for near-surface geochemical anomalies, representing 670 sample points. The Mahale Project is located 30-40km west-southwest of the Sissingue Gold Project as shown below. Perseus's RAB rig was utilized to drill auger-style vertical holes into saprolite to 5.5m depths on average, on a nominal grid spacing of 100m X 100m across the Bele soil anomaly to identify targets for follow-up drilling with AC and RC drills. Fences of wide-spaced AC drill holes were drilled in select areas of the Bele prospect as a first pass drill test of gold in soil and/or auger anomalism. First pass RC drilling was conducted to test AC drilling and auger anomalism at depth at the Bele East, West and Central prospects. Although essentially an exploratory RC drilling campaign, RC drill hole spacing was fairly tight locally, down to 40m X 40m spacing, in order to better understand the nature, geometries and continuity to the mineralization. A number of significant RC drill intercepts were returned from the Bele East, West, and Central prospects, which is encouraging and suggests that a fairly extensive mineralizing system is present at Bele along the margins of a granitic intrusive that is estimated to be 3 kilometers in width, east-to-west, and at least 2 kilometers in a north-south direction. A number of significant RC intercepts are open-ended to depth and to varying degrees along strike. However, further drilling will be required in order to delineate a potentially economically viable resource, if one is present. Further work at Bele will commence in early 2014 with a program of ground geophysics, gradient IP and magnetics, before commencing further drilling. Given that the gold anomalism appears to be associated with the presence of pyrite, IP chargeability should be an effective tool to search for the extensions of gold mineralized zones and possibly locate additional targets for drill testing. Significant RC intercepts attained at Bele included: Bele East MHRC019 - 54m at 2.1g/t gold from 24m including 4m at 11.8g/t gold from 50m and 2m at 30.2g/t gold from 58m MHRC024 - 14m at 6.2g/t gold from 82m including 4m at 10.7g/t gold from 88m MHRC026 - 20m at 1.8g/t gold from 50m including 2m at 7.7g/t gold from 54m MHRC035 - 30m at 1.2g/t gold from 10m including 12m at 2.3g/t from 12m plus 30m at 0.6g/t from 60m Bele West MHLC007 - 16m at 2.1g/t gold from 24m MHLC011 - 24m at 1.6g/t gold from 70m MHLC022 - 6m at 5.1g/t gold from 60m MHLC025 - 12m at 4.3g/t gold from 8m including 2m @ 20.0g/t from 10m Bele Central MHRC046 - 2m at 6.9g/t gold from 30m plus 10m at 14.7g/t from 74m including 2m at 61.4g/t gold from 78m Mbengue and Napie Licenses There were no exploration activities on the Mbengue and Napie Licenses during the Quarter. Processing, imaging and interpretation products from the airborne magnetics and radiometrics surveys flown over Mbengue and Napie were received late in the Quarter and are under review to prioritise further exploration drilling on both projects. Tengrela Licences No exploration work was conducted on the Tengrela South or Sissingue license areas during the Quarter. Burkina Faso During the Quarter the Company entered into a farm-in agreement with West African Gold Limited ('WAG'), an Australian unlisted junior explorer, in respect of four exploration permits (Koutakou, Barga, Touya and Tangaye) in the orth of Burkina Faso . Under the terms of the agreement Perseus must spend a minimum of US$250,000 during the first year on exploration. Perseus may earn a 50% interest in the permits by spending US$2M and up to an 80% interest by spending an additional US$2M within 5 years. Corporate Cash, Bullion Based on the gold price on 31 December 2013 of US$1,201.50 /oz and an A$:US$ exchange rate of 0.8874, the total value of cash and bullion on hand at the end of the December 2013 Quarter was $28.2M , approximately $0.9M more than at the end of the September 2013 quarter ( $27.3M ). In addition to the above, the Group had a further $10.6M of cash on deposit in escrow accounts providing security for various matters including future environmental commitments. The Group's available cash balance as at 31 December 2013 was $16.0M (30 September 2013: $23.1M ). In addition, 8,984 oz of gold were held either on site, in the process of being refined or in the Company's metal account on the 31 December 2013 , ( 30 September 2013 : 2,922oz). Based on the parameters described above, this bullion was valued at $12.2M at 31 December 2013 . Gold Sales and Price Hedging Of the 44,617oz of gold sold during the Quarter ( September 2013 Quarter: 49,069oz) at a weighted average delivered price of US$1,318 /oz, ( September 2013 : US$1,342 /oz) a total of 23,000oz were delivered into forward sales contracts at an average price of US$1,263 /oz with the remaining gold sales occurring at prevailing spot prices. As at 31 December 2013 , the Company's gold price hedging position included 124,000oz of gold deliverable in quarterly installments up to and including 31 December 2015 at a weighted average price of US$1,463 /oz. This includes a total of 70,000oz of gold deliverable in quarterly installments during the 2015 calendar year at an average price of US$1,600 /oz. The Company also held options to sell a further 9,000 oz of gold at a price of US$1,150 /oz at any time up to 10 January 2014 , and 9,000 oz of gold at a price of US$1,100 /oz at any time up to 31 January 2014 . The total hedge position was 'in the money' to the extent of US$31.6M as at 31 December 2013 ( 30 September 2013 : US$14.4M ). In the March 2014 Quarter, 8,000oz of gold is scheduled to be delivered at an average price of US$1,269 /oz under the hedge programme. VAT Receivable Having received cash refunds totalling GHC6.2M to date, during the Quarter, the Company sought to negotiate a factoring deal with a number of financial intermediaries in relation to the outstanding GHC93M ( US$39.4M ) VAT receivable owed to the Company by the Ghanaian Government. These negotiations were unsuccessful in reaching agreement on terms that were acceptable to Perseus. However, as an alternative, the Company mandated a Ghanaian legal firm that specialises in revenue law to intervene directly with the Government on the Company's behalf. This intervention by Perseus's legal team has resulted in: The Ghana Revenue Authority has advised in writing their decision to issue GHC60M of Treasury Credit Notes to cover that part of the obligation that has been formally audited and approved. Discussions with the Government to include a cash component in the final settlement mix have reached an advanced stage. Negotiations are continuing to ensure that through administrative measures available to the Government, the VAT receivable does not increase in future. Working Capital Debt Facility During the Quarter, discussions were conducted with the Company's bankers on the provision of a US$25M stand by debt facility to be used as required to fund working capital. A term sheet was negotiated and Credit Committee approval for the term sheet was received and preparation of detailed loan documentation was commenced. On close examination of the detailed terms of the debt facility, the Company formed the view that on balance, while the facility was available, it was preferable to remain unencumbered in an environment of uncertain gold prices, and therefore decided not to proceed with implementation of the debt facility at this time. Program for the March 2014 Quarter Edikan Gold Mine Produce gold at a total all-in site cash cost that is in line with Half Year guidance; Continue to fine tune plant metallurgical performance and maximise SAG mill throughput; Continue training of operating and maintenance staff and Continue to implement business improvement initiatives across all departments of the EGM and realize projected cost savings. Sissingue Gold Mine Development Project Review of project cost structure and development options and Review project economics and financing alternatives. Tengrela Gold Exploration Project Continue exploration for Mineral Resources on Mahale, Mbengue and Napie exploration licences. Contact: Jeff Quartermaine Tel: +61 8 6144 1700 Email: firstname.lastname@example.org Nathan Ryan Investor Relations Tel: +61 420 582 887 Email: email@example.com Caution Regarding Forward Looking Information This report contains forward-looking information which is based on the assumptions, estimates, analysis and opinions of management made in light of its experience and its perception of trends, current conditions and expected developments, as well as other factors that management of the Company believes to be relevant and reasonable in the circumstances at the date that such statements are made, but which may prove to be incorrect. Assumptions have been made by the Company regarding, among other things: the price of gold, continuing commercial production at the Edikan Gold Mine without any major disruption, development of a mine at Tengrela, the receipt of required governmental approvals, the accuracy of capital and operating cost estimates, the ability of the Company to operate in a safe, efficient and effective manner and the ability of the Company to obtain financing as and when required and on reasonable terms. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which may have been used by the Company. Although management believes that the assumptions made by the Company and the expectations represented by such information are reasonable, there can be no assurance that the forward-looking information will prove to be accurate. Forward-looking information involves known and unknown risks, uncertainties, and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any anticipated future results, performance or achievements expressed or implied by such forward-looking information. Such factors include, among others, the actual market price of gold, the actual results of current exploration, the actual results of future exploration, changes in project parameters as plans continue to be evaluated, as well as those factors disclosed in the Company's publicly filed documents. The Company believes that the assumptions and expectations reflected in the forward-looking information are reasonable. Assumptions have been made regarding, among other things, the Company's ability to carry on its exploration and development activities, the timely receipt of required approvals, the price of gold, the ability of the Company to operate in a safe, efficient and effective manner and the ability of the Company to obtain financing as and when required and on reasonable terms. Readers should not place undue reliance on forward looking information. Perseus does not undertake to update any forward-looking information, except in accordance with applicable securities laws.
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