S&P/ASX 200 Index (ASX: XJO) gold stock Perseus Mining Ltd (ASX: PRU) has enjoyed a tremendous run over the past 12 months.
At the time of writing, Perseus Mining shares are up 0.3%, changing hands for $3.97 apiece.
That sees shares in the ASX 200 gold stock up 69.7% since this time last year, smashing the 10.0% gains delivered by the benchmark index over this same period.
And that doesn't even include the 6.3 cents a share in unfranked dividends Perseus has paid eligible stockholders over the year. At the current share price, the gold miner trades on an unfranked trailing dividend yield of 1.6%.
Perseus has enjoyed strong tailwinds amid a surging gold price. One year ago, the yellow metal was trading for US$2,327 per ounce. Today, that same ounce of gold is worth US$3,337 per ounce, up more than 43%.
But despite the near record gold price, Baker Young's Toby Grimm is calling time on this ASX 200 gold stock (courtesy of The Bull).
Here's why.
Is this ASX 200 gold stock a sell?
"This low-cost African gold producer has a strong balance sheet, which is enabling it to buy back shares even though they were recently trading at all-time highs," said Grimm, who has a sell recommendation on the ASX 200 gold stock.
On 30 April, with the release of Perseus Mining's March quarter update, management confirmed that the $100 million share buyback was approximately 33% complete, with 11,458,975 shares repurchased and subsequently cancelled.
As for that strong balance sheet, as at 31 March, the ASX 200 gold stock reported available cash and bullion of US$801 million, plus liquid listed securities of US$111 million. Perseus had no debt and an available undrawn debt capacity of US$300 million.
Over the three months, Perseus produced 121,605 ounces of gold at a weighted average all-in-site cost (AISC) of US$1,209 per ounce. The company reported average gold sales for the quarter of 117,585 ounces with a weighted average gold sales price of US$2,462 per ounce.
While that's a very tidy margin, Grimm is concerned that the incoming gold stream will taper out without some sizeable capital expenditures.
"Nonetheless, we note PRU's relatively short mine life, which will eventually require significant development or acquisitions," he said. "Consequently, this could materially change risks."
Noting that shares in the ASX 200 gold stock have risen from $2.61 on 2 January to trade at $3.83 on 29 May, Grimm concluded, "We see superior value elsewhere in the sector and suggest investors consider taking profits at these levels."
