Motley Fool Australia

Why the Perseus Mining (ASX:PRU) share price is sliding today

Old chest filled with gold coins
Image source: Getty Images

The Perseus Mining Limited (ASX: PRU) share price is down 4.71% to $1.32 in early afternoon trading. This comes after the company released its September quarter activities report.

Despite falling 43% from 27 February through to 13 March during the wider COVID-19-led market rout, Perseus Mining’s share price is still up 17% year-to-date. That compares the All Ordinaries Index (ASX: XAO), which is down 6%.

Investors who were fortunate enough to buy shares at the 13 March lows will be enjoying a gain of 86% today.

What does Perseus Mining do?

Perseus Mining is an Australian listed West African gold producer.

The company was originally an exploration company when it started in 2004. It acquired the historic Edikan heap leach mine in Ghana in 2006. Following successful exploration outcomes at Edikan, the company evolved from explorer to developer and then gold miner in August 2011.

Today Perseus operates 2 gold mines in West Africa. The company expects the first gold from its third mine, Yaouré, in December this year. It forecasts its gold production will increase to more than 500,000 ounces per year in 2021/2022.

Why is the Perseus Mining share price sliding?

Perseus Mining’s latest activities report offered mixed results in the short term with a more positive mid-term outlook.

On the plus side, the company reported gold production increased 6% from the previous quarter, to 68,772 ounces.

However, it came at a higher cost, with production costs increasing by 2% to US$823 (AU$1,151) per ounce. All in sustaining costs (AISC) hit US$964 per ounce, up 3% over the previous quarter.

Meanwhile, Perseus Mining’s gold sales declined by 23% to 60,441 ounces. This was somewhat balanced out by a 3% increase in the weighted average gold sales price, up to US$1,595 per ounce.

The company also reported a US$16.2 million decrease of its available cash and bullion on hand, down to US$147.4 million as at 30 September. Its corporate debt remains fully drawn to US$150 million, putting the company in a net debt position of US$2.6 million.

Perseus gold production and AISC guidance for the December 2020 half year was unchanged at 125,500 to 139,000 ounces at an AISC of US$940 to $1,025 per ounce.

Looking ahead, the company forecasts continued strong production at Edikan and Sissingué in the December 2020 quarter. Additionally, it stated that Yaouré was now expected “to contribute to the Perseus group’s production performance in this period for the first time”.

After a strong performance so far this year, the Perseus Mining share price is one to keep an eye on.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of June 30th

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Related Articles…