Perseus Secures Corporate Debt Facility For Yaoure Gold Mine; Releases Corporate Presentation

Perseus Mining Limited (ASX: PRU) announced on 8th April 2019 that the company had accepted a Committed Letter of Offer to raise a corporate debt facility. As per the company, the acceptance of the committed letter will provide the company with a US$150 million corporate debt facility, which will be used to develop the company’s third gold mine, the Yaoure Gold Mine in Cote d’Ivoire.

The debt facility will also serve the general corporate purpose; however, as per the company, the debt funding is subjective to the execution of formal documentation and customary conditions precedent for a facility of this nature. The customary conditions include the grant of an Exploration permit by the local government of Cote d’ Ivoire and the final board approvals. The Final application for the Exploration Permit is due to be considered by the Ivorian Cabinet on 10th April 2019

With debt funding commitments in place, the company now plans to proceed with the development of the mine under its strategic plan of producing more than 500,000 ounces of gold per annum with AISC of less than US$850 per ounce of gold produced from 2022.

Mine financing Plans:

The estimated cost for developing the company’s third gold mine is US$265 million, which also includes a contingency. The company intends to fund $150 million of the estimated amount for the corporate debt facility and over $80 million further from cash and bullion currently in the hand of the company.

The company also plans to indulge the future operating cash flows and proceeds from the exercise of warrants that expire later in April, in the development of the Yaoure mine.

Debt Facility:

Perseus mentioned that the international banks such as Macquarie Bank Limited (Australia), Nedbank Limited (South Africa) and Societe Generale (France) have committed to provide the company with a revolving cash advance facility of US$150 million.

The company also mentioned that all parties executed the Committed Letter of Offer and comprehensive Terms Sheet on 5th April 2019; the preparation of definitive finance documentation is in progress. As per the company, the definitive finance documents will reflect the terms as initially outlined in the Committed Letter of Offer and the first drawdown facility of the debt is available till 30th June 2019.

Perseus will pay an interest of London inter-bank offered rate (LIBOR) plus a margin, which is initially at 4.25% and will vary in line with the company’s Leverage Ratio.

Current Cash Reserves:

Perseus’s existing cash and bullion on hand (as at 31st March 2019) totalled at US$80.8 million, which excludes all escrowed cash balances and is available to fund the development of the mine.

Future Cashflows:

The company realised an average gold price of US$1,250 from 1st July 2019 to 30th June 2021, and it forecasts that the future operating cash flows from its two existing gold mines (Edikan and Sissingue) will be significant.

Perseus Mining mentioned that the cash flow for the development of the new mine from both the existing mines would exceed the required amount despite allowing for investment expenditure on sustaining capital for both the mines.

As per the company, the current funding plans excludes inflows of cash arising from the exercise of about 124 million warrants, which is currently outstanding as at 5^th April 2019 and matures on 19^th April 2019 and if exercised fully can bring an additional cash flow of US$40 million for the development of the new mine.

With Funding plans in place and application of the Exploration Permit in the final stage of processing, Perseus is progressing to develop its third mine.

In a corporate presentation released separately by the company, Perseus reported 29% increase in production (288,463 ounces) and 10% lower AISC (US$994 per ounce), both in line with guidance, for the year FY18. The company stated that cash and cash equivalents jumped 221% from -A$19 to +A$23 million for the financial year.

For the March quarter, company reported 69,139 ounces of gold, with YTD gold production of ~207K ounces. The quarter production experienced 5% increase as compared to its previous quarter.

The company also released in near term guidance as depicted below-

Source: Company’s corporate presentation on 8 April’19

The stock of the company closed at A$0.490 (as on 8^th April), up by 6.52 % as compared to its previous close and it continues to mount up on Yaoure’s prospect.

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