Perseus Mining remains top gold pick in Canaccord’s coverage
Published: 23:27 28 Oct 2021 EDT
Perseus Mining Ltd (ASX:PRU, TSX:PRU, OTC:PMNXF) remains a top pick among Canaccord Genuity (TSX:CF, LSE:CF)’s gold sector coverage.
The gold miner, which operates precious metal assets in Ghana and Cote d’Ivoire, retained its buy rating and a A$2.10 price target in the latest performance note from the financial services firm. PRU is now trading at A$1.59.
Although the group’s production metrics underwhelmed in the September quarter, all-in sustaining costs (AISC) were a bright spot on the balance sheet.
On average, it cost Perseus US$966 to produce one gold ounce in the quarter, coming in below the all-important US$1,0000/ounce mark — and Canaccord’s US$999 AISC forecast.
Despite the lower production rates — brought on by grade reconciliation headwinds at the Edikan gold camp in Ghana — the miner couldn’t beat the US$947/ounce target set by forecast aggregator Visible Alpha.
Perseus is producing at the Edikan, Yaouré and Sissingué gold mines in West Africa.
Over the quarter, Perseus generated a collective 113,000 gold ounces across its three gold hubs — down on the 128,000-ounce target Canaccord was expecting.
Nevertheless, the gold miner’s operating cash flow held strong at US$78 million.
Cash and bullion provided the precious metals stock with US$196 million for the coffers, giving it a net cash position of US$90 million — US$40 million more than the end of the June period as it heads into 2021’s final quarter.
It looks like Perseus expects to take back lost ground in quarter four, with production guidance holding steady at between 225,000 and 255,000 gold ounces for the second half of the year.
Canaccord thinks so too, setting its guidance at the upper end of the spectrum at 253,000 ounces for the half.
This pits even Visible Alpha’s consensus, which sits at 246,000 ounces for the six-month period.
Discussing its solidified buy target, Canaccord analysts explained a ramp-up in activity at Perseus’ Yaouré mine could drive near-term production and free cash flow growth.
“While the production result was a slight disappointment, we expect the company to gather positive momentum moving into the December quarter …
“… Potential positive near-term exploration results at Yaouré could also go some way to pointing to medium- to long-term upside.”
