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PRU - PERSEUS MINING LIMITED


mminion

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G: Took profits at 2.95---very loth to chase it in view of tonights FOMC meeting which MIGHT disappoint the gold bulls--hate the thought of once again getting stranded or selling at a loss, I'm OK buying low and selling high, but no good at buying high!!
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The Perseus boss, Mark Calderwood, gave another presentation this week, this time in the US. Fairly much covered the same stuff as he did locally. But a couple of extra bits of info:

 

1. he reckons that even though 77% of the stock is traded on the ASX, 40% of total stock is now owned by North Americans, and 90% of total stock is held by institutions (so mum and dad operators like (most of) us on ss are few and far between). I guess if BarraKing still holds north of 300k of PRU he is on the way to becoming an institution (?). That seems to me to be a very high percentage of a non-producer being held by institutions: does that suggest that they are all sitting around waiting for a takeover?

 

2. in the presentation he volunteered that the Ivory Coast deposit, with a current resource of about 1.2m oz, has a grade of about 3g per tonne which he claims makes it the highest grade known deposit in west Africa. At the end of the presentation in answer to a question from the mc he said that their much bigger deposit, in Ghana, averages out at between 1.2g to 1.3g per tonne. There was a suggestion made in a post on ss recently (which appears to have been moderated out) that a main reason why west Africa was attractive was that it offered much higher grades than obtainable in Australia. I take it from the comments by Mr Calderwood that actually low grade high tonnage deposits are more typical of west Africa, that PRU's first project, in Ghanna, is a such a deposit, but that its second project, in Ivory Coast, has relatively high grades (for west Africa).

 

Here is a link to the preso (hat tip to LEE* on hc).

 

http://www.gowebcasting.com/events/denver-...lay/stream/1025

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Keep looking at PRU as a rentry prospect, but see Macbank are very active in this stock.
BTW- there ARE plenty of very high grade prospects in Africa--witness this announcement by SBL.
----------------------------------------------------------------------------------------------------
Signature Metals Limited is very pleased to update the market on the
progress of its exploration programmes at the Konongo Gold Project,
located in the world class Ashanti Gold Belt of Ghana.

HIGHLIGHTS

Several new discoveries made within the project area.

Numerous drill targets identified, to be tested later in 2010.

Trenching results include:

2 metres at 39.8g/t gold, 2 metres at 4.80g/t gold and

54 metres at 0.22g/t gold at Bimma South.

8 metres at 3.84g/t gold and 22 metres at 1.52g/t gold

at Kyereben.

2 metres at 11.7g/t gold, 2 metres at 4.24g/t gold,

14 metres at 0.3g/t gold and 30 metres at 0.24g/t gold

at Boabedroo West.

6 metres at 0.41g/t and 4 metres at 0.89g/t gold at

Konongo East.

Rockchip samples return maximum assays of:

19.7g/t gold at Kyereben.

14g/t gold at Triple Lane.

3.47g/t gold at Kwareju.

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flower

 

Quiet afternoon so I'll joust with you.

 

Some of those figures that Signature reported look impressive, but some look downright ordinary. So I thought I'd check out what they say on their website. They claim to have bought 70% of a JORC'ed up resource of 1.27m oz at 2.0 g per tonne. There is also a processing plant onsite that they reckon they can get going again.

 

But hang on. That's not that flash in itself. For instance, Norton Goldfields (NGF) runs a very high cost operation based around the Paddington mill in WA, and they are working with a resource of better than 5m oz at 1.95 g per tonne. Sorry but you don't sway me with that example.

 

There most certainly are high grade deposits in west Africa, with the Obuasi project in Ghana owned by AngloGold Ashanti an obvious argument winner. Based on grades of 5.1 g per tonne it has a huge resource of over 37m oz of gold. In 2008 it produced 357k oz of gold but at a total production cost of $834 per oz (Obuasi is part open cut and part underground). Seeing that the average gold price for 2008 was less than $900 Obuasi would have been offering AngloGold Ashanti plenty of bulk but not too much advantage. An example of west Africa offering low grade low cost opportunities is AngloGold Ashanti's other Ghanan project, Iduapriem. On a grade of 1.43 g per tonne it has 4.9 m oz of resources, but at a total production cost in 2008 of $611 for each of 200k oz of gold produced it was more than paying its way.

 

So I suppose you are correct that there are indeed high grade opportunities in west Africa, and nimble juniors should be able to pick up smaller high grade operations that the big guys may not bother with. But I stick with my contention that the reason why the major operators like AngloGold Ashanti and Newcrest would feel compelled to have a presence in west Africa is that there are a number of massive low cost low grade deposits being found and developed. They are after the resources as much as the grades. In the context of Perseus its main project and the first one they are developing is one of these low cost low grade large scale deposits. I still think that Newcrest has either to get bigger in west africa or get out and Perseus would be a good fit for them. Idle speculation of course (it has been a very boring week for my investments).

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Morning Triage--beautiful spring day down here in WA wineland--no jousting for me today--may not re-enter PRU,--I'm looking at a soon to be gold miner in Africa that goes 5.1gpt with projected production costs of under USD350, tell you which one once I've got set!

:hypocrite::icon14:

(got a bit more Fundamental research to do first)

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flower

 

I hope you go well with your 5.1g per tonne african goldie (though if it is the one I'm thinking of I have to say that the horn of africa can hardly be described as west africa and I thought the focus of this discussion was on west africa).

 

FWIW here are a couple of other ASX stocks that presented at the recent Africa Downunder conference that claim to be kicking rocks in Ghana looking for gold:

 

Asumah Resources (ASM)

Bendigo Mining (BDG)

Castle Mining (CDT)

Adamus Resources (ADU)

 

Perseus of course also gave a presentation.

 

The thing I like about Ghana, relative to some of the other west african nations, is that (1) for a while at least it was a british colony, not a froggie one (luv 'em or loathe 'em the poms tended to set up solid admin and legal systems wherever they went) and (2) it is mainly one religion (that happening to be various takes on christianity) whereas other west african countries like Ivory Coast and Burkina Faso have large smatterings of muslims, christians and people who follow traditional beliefs. I don't have a set against islam it is just that it seems to be going through a sorting out period like the christians did a few hundred years ago (when everyone were convinced only they had all the answers) which does not provide a sound base for investments imo. However my understanding is that the fundamental weakness with almost all of the countries in west africa, including Ghana, remains that their borders were determined by the colonialists which means that various ethnic groups have been bundled together whether they liked it or not.

 

To get an idea of which countries in west africa are prospective for gold the downunder presentation by Bassari Resources (BSR), which is looking in Senegal, has a good map.

 

Given my worry that funding will remain at best tight and that cash and cashflow is king for resource companies, of the west african goldies I have looked at I remain most impressed with the prospects for Perseus. They looked to be well cashed up to become a producer, and were they allowed a chance of getting some cash flowing - which is expected to be in the September quarter of 2011 - I think PRU would quickly become a dominant operator in the region. But given what is happening to the gold price, and given the consolidation activity that is happening right now in the gold sector, I suspect that PRU needed to be going into production probably 9-12 months earlier than it is going to be to be safe from an opportunistic takeover. As it is, I think the best the management of Perseus can hope for is that they attract several suitors to push the price up as much as possible.

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Triage--number of points!

 

Thanks for the 5 presenting stocks--ADU now taken over.

 

One I'm looking at is on the periphery of Africa generically but with sovereign risk, I'm not looking further then Q3 report date--as a trade.

 

Funding for production is not going to be a problem in current circumstances provided the asset base is proven and big, higher the grade the better, and all currencies are in USD's. One problem Im coming across is that many Oz based African companies hold their cash in AUD, whilst operating in USD's, thereby risking currency chaos as the AUD moves around so rapidly.

 

The general thesis propounded about the benefits to a share price increasing as it moves into production IMO isn't always true as the greatest increase in SP is seen as the resource is proved up by diamond drilling, hence PRU may have seen its steepest rise given production is imminent--hence as I already hold a brilliantly profitable producer I need a grass roots explorer in Africa with outstanding potential as my "trading" gold explorer. Any M&A activity is a bonus rather than a reason for holding any share IMO.

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