Jeff Quartermaine, Managing Director and CEO, Perseus Mining

Perseus Mining explain their expansion strategy in West Africa where the company is developing three gold projects.

Perseus Mining has just secured US$60 million dollars in funding. What strategy does the company intend to use in order to optimize those funds?

 US$40 million of the funding will be allocated to the development of our Sissingué project in northern Côte d’Ivoire and the remaining US$20 million will be used as needed for working capital. We now have the ability to press forward with our plan of producing gold from three mines and, by 2021, produce around 500,000 ounces of gold per year.

The strategy involves continuing to improve production from Edikan, our Ghanaian property, which has been cash positive since December 2016 and has produced in line with forecasts for the last two quarters. The second element is to bring the Sissingué gold mine into operation by the March quarter of 2018. By the end of August, development of Sissingué was about 72% complete and we are on track to achieve our target of producing first gold in the March 2018 quarter and start commercial production by 1 April 2018. Once we have generated sufficient cash from the Edikan and Sissingué operations and have arranged a suitable debt financing package, we will be able to accelerate the development of our third mine, the Yaouré project that is also in Côte d’Ivoire. We are currently conducting feasibility studies of Yaouré that will be finished around the end of October. As part of our definitive feasibility study, we successfully undertook a 70,000 metre drilling program to confirm the resources, and we are very encouraged by the results we received and by the early results from the feasibility study. We are confident that Yaouré will become a very important part of Perseus’s asset portfolio for a long time to come.

What strategies does the company have in place to manage the risks of its operations abroad?

When operating in West Africa, things can change quickly so we want to maintain a spread of risks, both political and technical. We have been a single mine operation for some time, and if something were to happen to that mine, we would encounter problems. A second cash source is therefore vital to achieving a reliable income stream and with Sissingué due to come on stream early in the new year, we are on target to achieve this and, in doing so, reducing the overall risk profile of the company.

What are the advantages of developing a gold mining project in Western Africa given the current state of the market?

When we began work on the Sissingué project, it was ideal timing because the lack of activity in the sector allowed us to engage contractors at relatively low rates in comparison to those that might apply in a bull market for gold. In contrast, our first mine, Edikan, was brought into production during a peak market, making labor difficult to source. Good quality assets, a strong and capable workforce, financing, a strong social license to operate and a favorable market are necessary ingredients, and the absence of one of those components will result in a struggle. What separates Perseus Mining from some other companies is that when we talk about growth, we already own the assets that will deliver that growth and we are putting them to work as we speak.

What benefits from headquartering here in Western Australia do you enjoy, and how does working remotely impact your operations?

The company was conceived here, and our staff and our families are based here. If an urgent matter arises and we need to travel to the site; feasibly we could get on a plane at 10pm and be in West Africa by 11am the following morning.  At 2pm in Perth it is 6am in Ghana, marking the start of an eight-hour period when we are able to communicate. The advantage of being based in Perth is there is a huge pool of mining and commercial expertise, and we are able to purchase those skills in Australian dollars rather than in American dollars or Sterling. We don’t think we lose anything in terms of management control by being based in Perth. Quite the contrary, we think that there are very positive advantages but most importantly, it works for us. 

What approach does Perseus Mining take towards the local communities where it operates?

Perseus places a very high priority in working closely with our host communities and host governments to establish harmonious and mutually beneficial relations. We have come to realise over time that there is a very close nexus between harmonious community relations and harmonious labour relations. The fact that this exists is a function of the fact that most of our workforce is drawn from the local communities and so if they are unhappy at home it does affect their performance at work and therefore the productivity of our mine.

At Edikan we have invested heavily in our community. Quite apart from investment in relocation housing and compensation for disturbance to farmers etc., we transfer a sum of money annually to the Edikan Trust which is a fund that is used by the community to undertake projects that they think will benefit their community. In addition to this, we invest in education and health. We have put more than 100 local youth through vocational training and this works well as many of them are then able to be employed productively in our mine and those who can’t get jobs with us are sufficiently skilled to find work elsewhere in the industry in Ghana.

In Cote d’Ivoire, we have adopted a similar philosophy in terms of establishing and nurturing relationships at both a government level and at the level of our host communities. It is relatively early days in terms of our relationships with the communities around Sissingué and also Yaouré, However, good progress has been made at both localities and we are very confident that both communities will benefit enormously in the fullness of time from hosting a Perseus run mining operation in their midst.


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