Perseus Mining Ltd (ASX: PRU) shares are marching higher today.
Shares in the S&P/ASX 200 Index (ASX: XJO) gold stock closed yesterday trading for $3.76. At the time of writing, shares are changing hands for $3.85 apiece, up 2.5%.
For some context, the ASX 200 is down 0.4% after taking an intraday fall amid news that Israel has launched strikes on Iranian nuclear sites.
Conversely, this led to a spike in the gold price and boosted Perseus Mining shares after open.
One year ago, on 13 June 2024, you could have picked up shares in the ASX 200 gold miner for $2.36.
Meaning shares are up 65.2% in a year.
But we shouldn't discount the miner's dividend payments.
Over the past 12 months, Perseus Mining has paid out 6.3 cents a share in unfranked dividends. If we add that back into today's share price, then the accumulated value of the shares purchased one year ago has gained 65.8%.
At the current share price, the gold stock trades on an unfranked trailing dividend yield of 1.6%.
A surging gold price
Atop its own strong operational performance, Perseus has gotten a big boost from the rocketing gold price.
A year ago, gold was trading for US$2,304 per ounce. At the time of writing, the yellow metal is fetching US$3,423 per ounce, up 48.6% over the year.
With this background in mind, just how much more upside does Macquarie Group Ltd (ASX: MQG) tip for Perseus Mining shares?
Perseus Mining shares in the spotlight
On Wednesday, 11 June, Perseus Mining shares closed down 6.0% following the release of the company's five-year operating outlook.
But Macquarie's analysts believe investors may have overreacted on the day. And with shares closing up 3.9% yesterday and well into the green again today, that appears to be true.
In a research report published today, Macquarie noted that the miner expects to increase its gold production.
According to Macquarie:
PRU expects to produce ~2.6Moz of gold from FY26-FY30, 17% more than our 2.3Moz prior estimate and 9% more than consensus. Production of ~430koz in FY26 is 4% below our estimate and 5% below consensus while FY27 was broadly in line with MQe/VA [Macquarie estimates and consensus estimates].
However, FY28- FY30 present average production upgrades of ~30% over our old outlook largely due to life extensions at Edikan and Sissingué.
Addressing the lower medium-term gold production forecast that looks to have weighed on Perseus Mining shares on the day, Perseus CEO Jeff Quartermaine said:
Perseus's decision in 2023 to defer development of its Meyas Sand Gold Project in Sudan and pivot towards acquisition and development of the Nyanzaga Gold Project, will lead to a short-term shortfall in 2026 and 2027 relative to this target.
Looking further ahead, Quartermaine added:
From the five-year outlook published today, it is clear that this is a temporary setback and that Perseus's strategy of consistently producing between 500,000 to 600,0000 ounces of gold per year at a cash margin of not less than US$500 per ounce, is eminently achievable.
Keep an eye on those costs
While longer-term gold production looks to be ramping up, so too are costs.
Macquarie noted that the miner "anticipates growth capex of US$878 million from FY26-FY30". The broker said this is 21% higher than its prior estimate of US$727 million and 40% higher than consensus analyst estimates.
Connecting the dots, the broker has an outperform rating on the ASX 200 gold stock.
According to the report:
PRU's 5-year plan was mixed with production higher than both our and VA prior estimates while AISC/capex were generally higher. Life extensions to Edikan and Sissingué are key to the stronger production, but attention now turns to the timeliness of Nyanzaga's development.
Macquarie has a 12-month price target of $4.00 on Perseus Mining shares.
That represents a potential upside of some 4% from current levels, not including those upcoming dividends.
