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Press release from CNW Group

Re-Optimised Mine Plan Significantly Boosts CAGP Economics

Monday, May 16, 2011

Re-Optimised Mine Plan Significantly Boosts CAGP Economics21:37 EDT Monday, May 16, 2011/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES./PERTH, Western Australia, May 17 /CNW/ - Perseus Mining Limited (ASX: PRU) (TSX: PRU) ("Perseus") is pleased to announce an updated economic analysis incorporating a revised Life of Mine Plan ("LOMP") for its Central Ashanti Gold Project ("CAGP") in Ghana.The new LOMP reflects upgraded crushing and grinding capacity announced in the December 2009 Quarterly Report, the latest Reserve upgrade announced on 23 December 2010, and throughput optimisation upgrades planned over the next 18 months.  A NI 43-101 technical report will be released shortly, followed by a conference call to present the update.Highlights of the upgrade include:Average process throughput increased from 5.5Mtpa to 7.9Mtpa.Additional 1,000,000 ounces of recovered gold.Average gold production to increase 38% to approximately 265,000ozpa. C1 cash costs increase to US$551/oz; base case gold price increased to US$1,150/oz.EBITDA over life of project increased 127% from $685M (July 2009 Feasibility Study) to $1,559M (US$1,150/oz gold price).The construction capital cost estimate has seen a minor increase from US$160M to approximately US$175M due to several factors including additional community expenditure, inflation, weakening of the US dollar and equipment changes.  It is worth noting that in Australian dollar terms, the capital cost has actually reduced from A$197M to A$168M.  The revised capital costs are detailed in Table 3.Mark Calderwood, Managing Director's Comments"The expected increase in annual gold production and gross profit margins has further improved the already robust economics of the project. Using a US$1,300 gold price, the projected EBITDA jumps by a further US$376M over the US$1,150 base case figure, to approximately US$1.9 billion.""The 17% increase in 2009 estimate of C1 cash costs is mostly attributable to the effects of the weak US dollar, the functional currency for the CAGP project.""Process facility construction is progressing rapidly and we remain on track to commence gold production in Q3 this year.""Additionally, given the level of drilling we are undertaking, I am confident that we can significantly increase Reserves later this year, providing an opportunity for further production rate increases."Mark Calderwood, Managing Director's Comments "The expected increase in annual gold production and gross profit margins has further improved the already robust economics of the project. Using a US$1,300 gold price, the projected EBITDA jumps by a further US$376M over the US$1,150 base case figure, to approximately US$1.9 billion." "The 17% increase in 2009 estimate of C1 cash costs is mostly attributable to the effects of the weak US dollar, the functional currency for the CAGP project." "Process facility construction is progressing rapidly and we remain on track to commence gold production in Q3 this year." "Additionally, given the level of drilling we are undertaking, I am confident that we can significantly increase Reserves later this year, providing an opportunity for further production rate increases."Table 1:  Project Operating Cost Estimate         LIFE OF MINE OPERATING COSTS  LOMUS$M $/TUS$ $/ozUS$ 2009 FSUS$/ozMining 991.1 11.28 338 288Process and Maintenance 493.4 5.62 168 153Administration 120.1 1.37 41 27Sub-Total 1,604.6 18.27 547 468Bullion and Refining 9.7 0.11 3 3Royalties1 219.9 0.50 75 52Sub-Total 229.6 2.61 78 55          TOTAL 1,834.2 20.88 625 523Notes1) Royalties are based on a gold price of US$1,150 per recovered ounce and exclude the 0.25% royalty payable to the vendor of CAGL.Table 2:  Project Economics Snapshot (Perseus 90%, Ghana Government 10%)Gold price$US 1,150/oz$US1,300/ozOre processed - tonnes @ g/t Au87.9Mt @1.2g/t87.9Mt @1.2g/tStrip Ratio2.9:12.9:1Capital Cost$US 175M$US 175MMining Costs$11.28/t ore, $338/oz$11.28/t ore, $338/ozProcess Recovery90%90%Processing Costs$5.62/t ore, $168/oz$5.62/t ore, $168/ozAdministration Costs$1.37/t ore, $41/oz$1.37/t ore, $41/ozRoyalties paid (1)$220M$249MEBITDA(2)US$1,559MUS$1,935MIRR(6)53%66%Payback period21 months17 monthsCorporate Tax paid (Ghana)$307M$401MCash Operating Cost/oz Av.(C1)$551/oz$551/ozNotes1)     Royalties are based on the current industry rate of 5% payable to the Government of Ghana and 1.5% paid to Anglo Gold Ashanti; no allowance has been made for acquisition royalties totalling 0.25%.2)     EBITDA is earnings prior to interest, tax, depreciation and amortisation but includes refining costs and royalties.3)     Corporate taxes as a rate of 25% are payable on net assessable income.4)     The Base Case reflects mining of Reserves from four deposits only.  It treats mined Inferred Resources as waste.5)     C1 definition comprises operating and refining costs.6)     IRR is calculated at the commencement of production.Table 3: Capital Expenditure for the Project Development   COST AREATOTAL (US$M)2009 FS (US$M)*DIRECT COSTS   Process Plant And Equipment95.582.3 Tailings Storage Facility12.610.0 Project Infrastructure3.48.9 HV Power Reticulation 10.69.2TOTAL DIRECT COSTS122.2110.4INDIRECT COSTS   Spares + First Fills + Inventory7.36.7 Owners Costs    Project Management3.62.2  Compensation, Community, Environment12.44.2  Pre-Production stripping and mining16.213.4  Other Owner's cost13.023.1TOTAL INDIRECT COSTS52.549.6TOTAL PROJECT COSTS174.7160.0* Updated to reflect the equipment changes as set out in the 2010 March Quarterly ReportMark CalderwoodManaging DirectorAbout Perseus Mining LimitedPerseus Mining Limited (ASX/TSX: PRU) has forged a reputation as one of West Africa's most successful gold explorers. Focused on under-explored gold belts in West Africa, Perseus is on track to become a producer by the third quarter of 2011 at its Central Ashanti Gold Project (CAGP) in Ghana.  The Company plans to produce at an average rate of 265,000 ounces of gold per annum at CAGP.Perseus is now also planning the development of its Tengrela Gold Project in Côte d'Ivoire, with commencement of production targeted for 2013. Tengrela has the potential to become a significant contributor to the Company's goal to develop into a 450,000 ounce per year gold producer during 2013.Perseus will continue its strategy of rapidly increasing its resource and reserve base during the development of the CAGP and Tengrela.The information in this report that relates to exploration results, mineral resources or ore reserves is based on information compiled by Mr Mark Calderwood, who is a Member of The Australasian Institute of Mining and Metallurgy.  Mr Calderwood is a Director and full-time employee of the Company.  Mr Calderwood has sufficient experience, which is relevant to the style of mineralisation and type of deposit  under consideration and to the activity which he is undertaking, to qualify as a Competent Person as defined in the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'") and to qualify as a "Qualified Person" under National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101").  Mr Calderwood consents to the inclusion in this report of the matters based on his information in the form and context in which it appears. For a description of Perseus' data verification process, quality assurance and quality control measures, the effective date of the mineral resource and mineral reserve estimates contained herein, details of the key assumptions, parameters and methods used to estimate the mineral resources and reserves set out in this report and the extent to which the estimate of mineral resources or mineral reserves set out herein may be materially affected by any known environmental, permitting, legal, title, taxation, socio-political, marketing or other relevant issues, readers are directed to the technical report entitled "Technical Report - Central Ashanti Gold Project, Ghana" dated November 30, 2009 and the technical report entitled ''Technical Report - Tengrela Gold Project, Côte d'Ivoire'' dated December 22, 2010 in relation to the Central Ashanti Gold Project and the Tengrela Gold Project respectively.Caution Regarding Forward Looking Information: This report contains forward-looking information which is based on assumptions and judgments of management regarding future events and results. Such forward-looking information, includes but is not limited to information with respect to future exploration and drilling,  procurement of financing, procurement of necessary regulatory approvals, the development of a mine at the Central Ashanti Gold Project, and development of a mine at Tengrela .  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.Table: Total Mineral Reserves  Deposit ProvenProbableTotal           Tonnes(million)g/tAuOuncesAu (,000)Tonnes(million)g/tAuOuncesAu (,000)Tonnes(million)g/tAuOuncesAu (,000)CAGP-(Ayanfuri) >0.4g/t  (1,2)47.71.31,97439.21.01,30086.91.23,273Tengrela >0.55g/t  (3)   9.72.16579.72.1657Total 47.7 1.31,97448.91.31,957 96.6 1.33,930 Notes>0.4g/t Au cut-off for Abnabna-Fobinso, >0.5g/t Au cut-off for all other deposits.Last updated in December 2010.Last updated in November 2010.Table: Residual Mineral Resources (Additional to Reserves)Deposit (cut-off g/t Au) Measured & Indicated Inferred Tonnes(million)g/tAuOuncesAu(,000)Tonnes(million)g/tAuOuncesAu(,000)CAGP-(Ayanfuri) (1) >0.8g/t  12.21.558724.41.51,144CAGP-(Ayanfuri) (1)0.4g/t - 0.8g/t 19.90.746625.30.7538Grumesa (1,2)>0.4 (2) 25.10.647116.40.5247Tengrela(3) >1.0g/t 3.02.12003.31.7171Tengrela(3) 0.5-1.0g/t 3.00.8743.60.786Totals >0.8g/t(1.0g/t Tengrela) 15.2 1.6 787 27.7 1.5 1,315Totals >0.4g/t(0.5g/t Tengrela) 63.20.9 1,798 73.0 0.9 2,186 NotesLast updated in December 2010.Primary reported above 0.4g/t Au cut-off, oxide/transition report above 0.2g/t Au cut-off.Last updated in November 2010.The Company holds 90% of CAGP, 90% of Grumesa and 85% of Tengrela after allowing for Government equity at mining stage.    For further information: To discuss any aspect of this announcement, please contact: Mark Calderwood at telephone +61 8 9240 6344 or email calderwoodm@perseusmining.com Nathan Ryan at telephone +61 420 582 887 or email nathan.ryan@nwrcommunications.com.au Rebecca Greco at telephone +1 416 822 6483 or email fighouse@yahoo.com (Toronto)