Progress on the license, which has been under discussion for two years, has been “painfully slow” amid a “rocky” political landscape, Quartermaine tells The Africa Report from Subiaco in western Australia.
Perseus, which trades on the Australian stock exchange, operates gold mines at Sissingué and Yaouré in Côte d’Ivoire, and Edikan in Ghana. Fimbiasso is a satellite deposit outside the existing Sissingué exploitation permit, but within trucking distance of the Sissingué mill. The company’s plans for Sissingué include hauling gold from Fimbiasso to the mill for processing towards the end of this year.
Securing the license is “a matter of urgency” Quartermaine says. “We would like to have the license issued right now.” Options to delay the start-up of Fimbiasso are being considered due to the hold-up, he adds.
- Because of the trucking authorisation being sought, the license is more complicated than those previously issued by the Côte d’Ivoire, Quartermaine says. The country is a “younger” mining jurisdiction than Ghana and is “still evolving.”
- A further complication has been the expansion in April of the Côte d’Ivoire’s previous ministry of mining and geology into a new ministry for mines, petroleum and energy.
- A knock-on effect Sissingué operations is possible if the license is not forthcoming, but Quartermaine notes that Sissingué accounts for only about 10% to 15% of company production, so any disruption can be absorbed. He is developing contingency plans if the license is not quickly secured.
Operations at Yaouré in Côte d’Ivoire are going “exceptionally well” after gold production started at the end of 2020, Quartermaine says. He anticipates that from September, the company will be able to produce 500,000 ounces of gold per year across its sites.
The reserves at Yaouré are far from having been fully assessed, he says. So far, Perseus has only been able to “scratch the surface.” An updated statement of reserves for Yaouré is due at the end of June, but a full inventory of reserves is likely to take two to three years, he adds.
Quartermaine spends more time worrying about controlling costs than the future direction of gold prices, which, he says dryly, will either “go up, go down or stay the same.” Perseus has mining costs of slightly below US$1,000 per ounce, so at current price levels around US$1,800, the company is making around US$800 per ounce of gold mined.
- A fall in prices to below US$1,400 per ounce, he says, would start to put pressure on the company’s margin targets.
- A stable gold price, he estimates, would create potential operating cashflow of US$400m for the company.
Cash-positive Perseus has three priorities for using its money, Quartermaine says. These are strengthening the balance sheet, investing for growth either organically or via acquisitions, and returning cash to shareholders.
- The three existing mines all have “significant potential” for further investment and Quartermaine is “absolutely” interested in finding new exploration sites, which could be in new African countries.
- The company has accumulated “intellectual capital” on operating in west Africa, but would still be willing to look further afield.
- Still, entering new countries would entail new political risks, he adds. “Paying taxes to governments requires cash. We have to be sure we can generate that income.”
Côte d’Ivoire has everything to gain from a fast and predictable licensing policy for mining exploration permits.
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