Perseus Mining Limited: Half Year Financial Results

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN
THE UNITED STATES


Perseus Mining Limited ("Perseus" or the "Company") (TSX:PRU)(ASX:PRU) today
announced a net after tax loss of $4.024 million or 0.84 cents per share for the
six-month period ended 31 December 2013.




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                                                           31 December 2013 
                                                                  Half Year 
RESULT HIGHLIGHTS(1)                                                 A$'000 
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Revenue from gold sales                                             135,276 
Net Profit / (Loss) after tax                                        (4,024)
Earnings per Share (A$ cents per share)                               (0.84)
Return on Funds Employed(2)  (%)                                        n/a 
Net cash flows from operating activities                             (1,782)
Net cash flows used in investing activities                         (17,811)
Net cash flows from financing activities                                  - 
Available Cash Balance(3)                                            16,016 
Total assets                                                        603,192 
Shareholders' equity                                                486,059 
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1. Assumes 31 December 2013 half year average AUD:USD exchange rate of  
0.9218 and exchange rate as at 31 December 2013 of 0.8874               
2. Defined as assets less current liabilities                           
3. Excludes value of 8,984 ounces of bullion on hand or at the refinery.



Comments from Perseus's Managing Director, Jeff Quartermaine

The six months to 31 December 2013, have presented challenging trading
conditions for many participants in the gold sector, and we are no exception. 


In response to a falling gold price, Perseus adopted a production strategy aimed
at minimising capital investment. This meant that part of our mill feed for the
period was drawn from existing low grade ore stockpiles in preference to
targeting higher grade ore from new mining areas that required investment of
significant amounts of capital to pre-strip waste. 


Notwithstanding very material improvements in productivity measures including
mill runtime, throughput rates and recoveries, processing lower grade ore
resulted in lower gold production and when combined with significantly lower
gold prices, our profitability and cash flow declined relative to prior periods.



Looking forward, given the material productivity improvements made to our
operation along with a reduction in our operating cost base during the last six
months, we are now well positioned for the future, when in accordance with our
updated Life of Mine Plan higher grade ore will be available for processing. If
combined with gold prices at or above current levels then improvements in
financial performance are expected to eventuate. 


Financial Commentary 

Profit Overview

The group's net after tax loss for the half-year ended 31 December 2013 was
$4.024 million. The decrease in profitability relative to prior periods was due
mainly to a 9% decrease in gold production at the Edikan Gold Mine ("EGM"),
resulting from a planned 28% decrease in the head grade of ore processed,
coupled with an unplanned 12.5% decrease in the realised sale price per ounce
for gold relative to the corresponding prior period. 


Revenue

Revenue of $135.276 million was earned during the period from the sale of 93,686
ounces of gold at an average sale price of US$1,330 per ounce. A total of 46,000
ounces of gold were delivered into forward sales contracts at an average of
US$1,259 per ounce while the balance of gold sales was made at prevailing spot
prices for gold. 


Cost of Sales

Costs of sales included mining, processing and site G&A costs (excluding
salaries) totalling $94.256 million and employee salaries and share based
payments of $14.697 million (including termination payments made to employees
made redundant during the period) before adjusting for a positive movement in
inventories including ore stockpiles, gold-in-circuit and gold bullion on hand
of $5.358 million. Costs associated with financing during the period totalled
$0.912 million and depreciation and amortisation totalling $20.712 million
(including $8.401 million of amortisation of a deferred stripping asset) were
also charged to the Income Statement during the period. 


Royalties 

Royalties totalling $8.507 million were paid to external parties during the
financial year. The largest royalty of 5% of revenue earned from the EGM was
paid to the Ghanaian government. Lesser royalties of 1.5% of revenue and 0.25%
of gold produced were also payable to unrelated private parties in accordance
with the terms of purchase of the Edikan mining lease.


Impairment of Available-for-sale financial asset

The value of the Company's investment in Manas Resources Limited (13.1%
interest) which is recognised as an available-for-sale financial asset, was
impaired by $2.225 million to a carrying value of $1.736 million, reflecting
market value as at 31 December 2013.


Income Tax Expense

The income tax gain that has been recognised in the Income Statement comprises
$0.517 million, primarily relating to the loss incurred at the EGM during the
period. The corporate tax rate in Ghana is 35% for mining companies.


Cash Flow

Cash receipts from the sale of gold totalled $130.962 million during the period
while total cash out flow from operating activities during the period totalled
$1.782 million. The total net cash outflow for the period of $19.593 million
(4.3 cents per share) included cash out flow from operating activities referred
to above plus an outflow of $17.811 million for investing activities, most
notably exploration, and capital works at the EGM in Ghana. There was no cash
flow relating to financing activities during the period.


Financial Position

As at 31 December 2013, the Company's net assets totalled $486.059 million (10.6
cents per share) including working capital (defined as the excess of current
assets over current liabilities) of $21.597 million. 


Cash and Investments

At 31 December 2013 available cash totalled $16.016 million (3.5 cents per
share) while additional deposits totalling $10.634 million (2.3 cents per share)
supported performance guarantees for environmental rehabilitation of the EGM.


In addition, the Group held 8,984 ounces of gold at its EGM, at the refinery
while in the process of being refined or in the Company's metal account on this
date.


Perseus also held $0.652 million of equity accounted investments comprising
security holdings in the ASX listed company Burey Gold Limited (23.0% interest).
The Company's investment in Manas Resources Limited was carried at a value of
$1.736 million.


Receivables

At 31 December 2013 the Company's current receivables were $9.270 million and
non-current receivables amounted to $55.050 million including $44.416 million
attributable to a VAT refund from the Ghana Revenue Authority ("GRA"). The GRA
has acknowledged the validity of the debt and has been working with the Company
to agree a mutually acceptable mechanism for repaying the outstanding amount.
Subsequent to the half year end, GRA agreed to grant GHS 60 million of treasury
credit notes to be offset against payments to the government (including
royalties and other taxes) in partial settlement of the outstanding liability.


Debt Finance

At 31 December 2013 the group's borrowings were nil. 

Derivative financial instruments

As at 31 December 2013 the Company held forward sales contracts for 124,000
ounces of gold and recorded an asset of $35.464 million on its balance sheet.
These contracts are designated as effective hedge contracts, and the movement in
mark-to-market value has been recorded in equity. A total of $4.971 million of
the asset has been classified as a current asset as these forward sales
contracts will settle within twelve months while the balance of $30.493 million
has been classified as a non-current asset. 


The asset in each case reflects the difference in value of the hedge contracts
on the respective balance dates relative to the value of the contracts on the
date of inception of hedge accounting.


The amount of gold sold forward under hedging agreements represents 4% of the
gold contained in the group's currently defined total Ore Reserves and
approximately 30% of the group's total forecast gold production to the end of
2015. 


Dividends

The Company has established a dividend policy that provides for the payment of
dividends to shareholders when Directors are confident that such payments can be
sustained from cash flow on an ongoing basis. 


No dividends were declared or paid during the period.

Jeff Quartermaine, Managing Director and Chief Executive Officer

Caution Regarding Forward Looking Information: This report contains
forward-looking information which is based on the assumptions, estimates,
analysis and opinions of management made in light of its experience and its
perception of trends, current conditions and expected developments, as well as
other factors that management of the Company believes to be relevant and
reasonable in the circumstances at the date that such statements are made, but
which may prove to be incorrect. Assumptions have been made by the Company
regarding, among other things: the price of gold, continuing commercial
production at the Edikan Gold Mine without any major disruption, development of
a mine at Tengrela, the receipt of required governmental approvals, the accuracy
of capital and operating cost estimates, the ability of the Company to operate
in a safe, efficient and effective manner and the ability of the Company to
obtain financing as and when required and on reasonable terms. Readers are
cautioned that the foregoing list is not exhaustive of all factors and
assumptions which may have been used by the Company. Although management
believes that the assumptions made by the Company and the expectations
represented by such information are reasonable, there can be no assurance that
the forward-looking information will prove to be accurate. 


Forward-looking information involves known and unknown risks, uncertainties, and
other factors which may cause the actual results, performance or achievements of
the Company to be materially different from any anticipated future results,
performance or achievements expressed or implied by such forward-looking
information. Such factors include, among others, the actual market price of
gold, the actual results of current exploration, the actual results of future
exploration, changes in project parameters as plans continue to be evaluated, as
well as those factors disclosed in the Company's publicly filed documents. The
Company believes that the assumptions and expectations reflected in the
forward-looking information are reasonable. Assumptions have been made
regarding, among other things, the Company's ability to carry on its exploration
and development activities, the timely receipt of required approvals, the price
of gold, the ability of the Company to operate in a safe, efficient and
effective manner and the ability of the Company to obtain financing as and when
required and on reasonable terms. Readers should not place undue reliance on
forward-looking information. Perseus does not undertake to update any
forward-looking information, except in accordance with applicable securities
laws.


FOR FURTHER INFORMATION PLEASE CONTACT: 
Perseus Mining Limited
Jeff Quartermaine
+61 8 6144 1700
jeff.quartermaine@perseusmining.com


Perseus Mining Limited
Elissa Brown
CFO
+61 8 6144 1700
elissa.brown@perseusmining.com


Nathan Ryan
Media
+61 3 9622 2159
nathan.ryan@nwrcommunications.com.au
Perseus Mining (TSX:PRU)
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