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Perseus Mining: A Look At The FY-2019 Results

Mar. 09, 2020 5:45 AM ETPerseus Mining Limited (PMNXF), PRU:CA2 Comments
Taylor Dart profile picture
Taylor Dart


  • Perseus Mining reported its H2 2019 results in late February, with FY-2019 results being roughly in line with guidance provided earlier in the year.
  • The company's costs came in just below the industry average, but Perseus's third mine is currently under construction, unlocking the potential for significant production growth by 2022 at lower costs.
  • The company's FY-2020 guidance is projecting low single-digit production growth, with a slight drop on the cost side to just below $900/oz.
  • Based on solid production growth ahead and a high likelihood of significantly improved margins by FY-2022, I would view any dips below the C$0.78 level as buying opportunities.

It was a tough start to the year for the African gold names despite higher gold (GLD) prices, with names like Orezone Gold (OTCQX:ORZCF), IAMGOLD (IAG), and Compass Gold (OTCPK:COGDF) all down double digits to start the year. Fortunately, Perseus Mining (OTCPK:PMNXF) has managed to evade this theme of underperformance thanks to decent operating results and a strong pipeline for growth ahead, outlined in its H2 2019 report. While the stock is down 6% year-to-date, it was the top performer in 2019 by more than 6000 basis points with a 167% return.

Given that the company met its ambitious guidance in FY-2019 and has outlined improved guidance for FY-2020, I believe that 30% corrections in the stock are likely to provide buying opportunities. This is especially true given that we could see the first gold pour from the company's Yaoure Project by December. Based on this, I would view drops to the C$0.78 level as a low-risk area to start a position in the stock.

(Source: AfricanBusinessCommunities.com)

Perseus Mining reported its H2 2019 results in late February and had initially set guidance at 120,000 to 140,000 ounces of gold production at all-in sustaining costs ranging from $850/oz to $1,000/oz. This implied a guidance mid-point of 130,000 ounces for production and a cost mid-point of $925/oz. The company's actual results came in more than 3% above guidance on the production side, with gold production of 135,000 ounces, and all-in sustaining costs came in roughly 1% above estimates at $942/oz.

While this was a slight miss on the cost side, it's important to note that the company was already guiding for a significant improvement from H2 2018, with all-in sustaining costs coming in at $999/oz for the period. It's also important to note that royalties increased for the company in the H2

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Taylor Dart profile picture
"A bull market is when you check your stocks every day to see how much they went up. A bear market is when you don't bother to look anymore."- John Hammerslough You can access more in-depth research, my current portfolios, new positions I am entering/exiting, and proprietary sentiment indicators for gold miners in my newsletter below.  Returns Link: https://imgur.com/a/6fcWjD6Subscription Link: https://buy.stripe.com/3cseV37nl9Y7dUcaEI - Disclosure: I am not a financial advisor. All articles are my opinion - they are not suggestions to buy or sell any securities. Perform your own due diligence and consult a financial professional before trading or investing.

Analyst’s Disclosure: I am/we are long GLD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Disclaimer: Taylor Dart is not a Registered Investment Advisor or Financial Planner. This writing is for informational purposes only. It does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Taylor Dart expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.

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Comments (2)

Chris Guenther profile picture
Long Perseus! I really like this stock, I am in at about half the current price. I like the upside with execution and growth and the leverage to gold process as well.
Taylor Dart profile picture
Hi Chris,

Definitely a solid company, I'm keeping an eye for a potential bottom over next month or so, but trying to stick to higher cap names currently with volatility in the markets.
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