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Summary

  • Perseus Mining reports a loss of $0.06 per share in the financial year 2014.
  • This was expected as the company had to mill lower grade ore and had a fire at the processing plant.
  • The investment thesis remains unchanged as the Edikan turnaround plan is a long-term plan and will take several years.

Perseus Mining (OTCPK:PMNXF) has released its financial results for the financial year 2014 which ended in June. Total revenues for the year were $240M which were lower than the year before due to the lower production of "just" 183,000 ounces of gold, compared to 200,000oz+ in the previous year. As the costs also increased, the company unfortunately showed a net loss of approximately $29M. On top of that, the company was also free cash flow negative, as the $17M operating cash flow wasn't enough to cover the $43M in expenditures on the property.

As explained in my earlier article, I am expecting a turnaround process at Perseus after the company has failed to live up to the expectations created in the feasibility study. For 2015, the company is guiding to produce 210,000-230,000 ounces of gold at a total site cost of $1100-1200/oz. Keep in mind Perseus Mining has sold forward 125,000 ounces of gold at an average price of $1468/oz, and this will result in some hedging profits over the next 18 months.

2015 should be the first year of the turnaround process, and the first step for Perseus will be to meet the production and cost guidance. Only if these conditions will be met, I'd dare to look further forward to see if the company's long-term objectives are achievable.

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Source: Update: Perseus Mining Earnings