Perseus Mining Limited (OTCPK:PMNXF) September ’22 Quarter Report Conference Call October 19, 2022 6:00 PM ET
Company Representatives
Nathan Ryan – Media Relations
Jeff Quartermaine – Managing Director and Chief Executive Officer
Conference Call Participants
Reg Spencer – Canaccord
Patrick Collier – Credit Suisse
Andrew Bowler – Macquarie
Alexander Paap – Citi
Operator
Nathan Ryan
Good morning and welcome to the Perseus Mining Investor Webinar and Conference Call. All attendees are in a listen-only mode. [Operator Instructions]. I’ll now hand over to Perseus Mining Managing Director and Chief Executive, Jeff Quartermaine. Thank you, Jeff.
Jeff Quartermaine
Thanks very much, Nathan, and welcome everybody to Perseus Mining’ webinar to discuss our September ’22 quarter report. Now, as usual today I’m joined on this call by several of my senior colleagues, including Lee-Anne de Bruin, Finance; Jess Volich, Sustainability and Phil Russo in Investor Relations. And they’ll available to answer specific questions within their area of expertise later on.
But what I plan to do this morning, though, is firstly to provide a brief overview of what Perseus has achieved operationally during the September 2022 quarter. And then follow that up with the Q&A session. I’ll keep my presentation brief has all the details that you need to understand our performances quarter are fully documented in the market release that was published earlier today. But let me highlight a few key points and then we can discuss the detail if you wish.
So once again Perseus delivered another strong production and cost performance this quarter record gold production in fact, and reposition to not only achieve our December half year production guidance, but if things continue to plan, we should stand a pretty good chance of outperforming the guidance range entirely. In the September ’22 quarter, Perseus produced 137,460 ounces of gold, 12% more than in the June quarter and nearly 7,000 ounces, more than our previous best quarterly result which was recorded in the March quarter this year. Perhaps more importantly, in the current economic climate, weighted average AISC cost for the quarter of US$879 per ounce was recorded. Now this is based on a weighted average production cost of US$762 per ounce. This All-In Site Cost which was the second best quarterly All-In Site Cost on record for Perseus I think the best was way back in March 2019. It was something like 12% lower than the June quarter and certainly places Perseus towards the bottom end of the global cost curve, the position that may not have been associated with Perseus a few years ago. And once again, we’re well on track to achieve guidance. That’s something that not everybody is able to claim at the moment.
Like everybody else in the mining industry, though Perseus is battling against a global trend of rising costs. But we are managing to keep things reasonably in check for the time being and long may that continue. Now, as I said in the past, the strong performance by Perseus over the last few years is a clear indication of our corporate strategy, which was to transform us into a multi mine multi jurisdiction business as rapidly as we as possible. This strategy is enabled us to not only materially increase our production and cash flow, but also to reduce the volatility of our performance by spreading our risks across three operations. Despite plenty of challenges from both within the business and outside the strategy of diversification has enabled us to stay on course and to keep delivering on our promises which goes to the to the very core of the values of this company.
In the past few quarters, our Yaouré mine has been the standout performer. This quarter once again, it’s continued in this manner albeit off the record highs of last quarter, producing 71,469 ounces of gold at an All-In Site Cost of US$658 per ounce. And this price, Yaouré well down the list in terms of the global cost curve. The star performer this quarter, though, has been the Edikan mine. It’s been a while since I could make this statement. But this quarter Edikan overcome the challenges the runtime, grade and recovery that experienced in recent quarters and produced 52,127 ounces of gold that’s 82% more than last quarter, and All-In Site Cost of US$1,060 per ounce which is a vast improvement on the cost of US$1,859 per ounce recorded in June. Now full credit goes to our team at Edikan and we led by Stephen Ndede and also our Chief Operating Officer, Chris Woodall, who, like me has ridden every bump in the tracker that he can over the last few years.
Last but not least, the course at Sissingué mine where an improved performance was also recorded this quarter. Now in the September quarter, Sissingué has produced US$13,864 ounces of gold and All-In Site Cost of US$1,336. Both of these metrics are better than last quarter and clearly demonstrated, the small mine that many thought should never been built, continues to punch above its weight and make a sound contribution to our bottom line. So all-in-all, it’s been another very good quarter on all three of our sites. And looking to the future, our market guidance for production and costs for the December half year of 240,000 to 265,000 ounces, at an All-In Site Cost of US$1,000 to US$1,100 per ounce looks very achievable at this time. And this should mean that our calendar year guidance of 493,000 to 518,000 ounces of gold at All-In Site Cost of US$980 to US$1,025 is also well within our reach.
Now I should note that in conducting all of our mining exploration activities across the company, we’ve sought to do this in a manner that is in line with the global sustainability standards that we’ve adopted. The exact metrics of our ESG performance are documented in full in the quarterly report and also in our annual sustainability report that was released to the market last Friday. It is, however, worth highlighting just a few of the achievements from this quarter on this call. In terms of safety performance across our operations is generally improved. Our triple total recordable injury frequency rates continuing on a downward trend, reducing from 1.45 at the end of March to 1.21 at the June and to 1.19, this quarters. And our lost time pre injury frequency rates across the groups remained flat at a fairly credible 0.26.
On the social front, Perseus has contributed the economic contribution to our host countries that we’ve been doing in the past. And in this quarter, it amounted to around US$116 million. This included approximately US$87 million paid to local suppliers representing about 78% of our procurement, US$8 million in salaries and wages to local employees, about US$21 million in payments to the government in the form of taxes, royalties, et cetera. And about US$1 million in social investment. These sums of money are actually quite important to our host countries. And we’re very proud to be able to contribute in this way. Even if we don’t usually take to the grandstand to highlight the work we do. Local and national employment that’s been maintained at or above the 95% level of our total workforce. And our gender balance across the group is fairly stable around 14% female, 86% male, which given the industry in which we operated but more particularly the cultural setting of our host countries is a reasonable outcome. I should note the situation is different in our corporate office, whether the male-to-male split is about 31:69 and then the management team 40:60. So I think that’s more of a reflection of the current cultural orientation of Australia as opposed to that of our host countries in Africa.
Now, environmentally, we’ve had no incidents of any type during the quarter. And in absolute terms, our Scope I and Scope II greenhouse gas emissions has actually reduced by about 5% from 0.55 at the end of last quarter to 0.5% at the end of this quarter. And this has largely come about as a result of Edikan replacing its grid power with power generated on site using natural gas as an energy source. So only if [Inaudible] as a whole, we’re performing reasonably well. And we remain committed to continuing to incrementally improve our performance in this area relative to the standards which we’ve set for ourselves and aligned to the internationally accepted standards in the most instances.
Now I should just make a note that we will be hosting a separate webinar on the 3rd of November, I think it is to discuss the fiscal ’22 sustainability report. And for those who would like to do a deeper dive into this area. Please join us on that occasion and we’ll explain things in full.
Now turning to financial matters. At the end of the quarter, our gross cash and bullion on hand, amounted to US$354 million. Now, after deducting our outstanding corporate debt of US$25 million, our net cash and bullion balance was US$329 million, an increase in net cash of US$51 million relative to the end of the June quarter. Now it should be noted that our cash and bullion on hand a US$354 million comprised of cash of US$197 million and 93,634 ounces of bullion on hand, valued at the spot price of US$1,672 giving a value of US$156 million. Now of the 93,634 ounces of bullion on hand, 67,261 ounces of the gold was held in Perseus’s metal account with the balance either in transit or on a site.
Now, I should make the point that the 67,261 ounces in the metal account is gold that was produced this quarter, and is designated for sale under existing forward sale agreements at an average price of US$1,780 per ounce, thus eliminating any price risk on this metal. Those sales contracts will be completed in the December quarter, when all sales will be brought to account. Now before anyone asked the question of why we didn’t close out the hedge contracts prior to the end of the quarter and put the cash on the balance sheet. There’s nothing particularly notable about this. It simply goes to the issue of managing our capital balances and cash flows, and making sure that all approvals are in place to move funds between onshore and offshore bank accounts before we make that move. So but by the end of ’22, by the end of this calendar year, all of the designated hedges will be closed out. And our yearend cash balance will reflect the receipt of some fairly significant amounts of cash during the quarter. I mean, I know for instance, that the hedge price of US$1,780 per ounce on the 60,000 odd ounces is above the spot price at which they were valued on the balance sheet that I just spoke up there. Speaking of hedging, in addition to the 67,261 announces that we’ve got and sub pre sold under that forward arrangement that I mentioned, we also have other forward sale contracts in place covering a further 336,000 ounces of gold, our future gold production at a weighted average cost of about US$1,890 per ounce.
Now this represents about 23% of our production on a three-forward production on a three-year rolling basis. And it’s important as even if the gold price weakens below the current levels as a result of the strong US dollar, Perseus’ projected cash flows, to a fair extent underwritten and this is a very healthy financial position to be in. To give listeners an understanding of just how much cash we are currently generating in the company. Our national cash flow this quarter was around a US$112 million. There’s obviously different to the US$51 million net increase in cash are not the same thing. So don’t confuse that. I don’t want to unnecessarily complicated but notional cash flow is somewhat theoretical as it doesn’t take into account the timing of payments and the timing of receipts. But it’s safe to say that right now, Perseus is generating a lot of cash and is in a very strong position to plan all of its activities including exploration, and the development of new projects and the continuation of our dividend policy from existing cash balances, let alone any future cash flows.
Now speaking of business growth activities, this is another area in which we’ve been very busy and pleasingly productive this quarter. Speaking firstly about our latest acquisition, namely the Block 14 project in Sudan, where we recently awarded 100,000-meter drilling program to Capital Drilling, highly regarded international drilling company. They’re in the process at the moment of mobilizing equipment to site and we would like to think that they’ll start drilling before the end of this month. Now their designated task is firstly to perform an infield drilling on the GSS deposit to convert some Inferred Mineral Resources into Measured and Indicated resources that can be incorporated into ore reserve and then the mine plan. In addition, they’re also tasked with performing sterilization drilling to ensure that in their enthusiasm to locate waste dumps and tailings dumps as close as possible to infrastructure, the previous owners of the property haven’t sterilized any valuable mineral deposits. We’ve also commissioned our friends at Lycopodium to undertake a Front-End Engineering and Design study, FEED study on Block 14, as it happens, like I prepared the definitive feasibility study for the previous owner of the property. So they’re very familiar with the project. But perhaps more importantly, they’re also very familiar with the exacting standards, the Perseus will require for this project to be built. We’ve learned a lot from the development of Sissingué and Yaouré over the last five years or so, and all of these lessons will be applied when it comes to the final design of the Block 14 mine development.
Now as part of that FEED study will also be undertaken confirmatory work on the water aquifer in area five that’s about 80 cases from the main deposit, and that area will ultimately supply water to the Block 14 operations when they’re up and running.
Now this work has been assigned a higher priority given the importance of water supplies in this part of the world. Once again, the contractors that we plan to use have a lot of experience in Sudan, and several of their consultants have in fact, have worked on the original study for the previous owners and we’re looking forward to early confirmation of the capacity of the aquifer to satisfy not only all of our water requirements but also for there to be excessive — excess water that we can share with any communities in the area, I must say there aren’t too many communities in the area. But if indeed there are people living there, then they will be able to gain access to that.
Now, aside from the above, there’s a lot of preparatory work happening on the ground in Sudan, things are tracking very, very well. And the one thing that does deserve comment is the terrific support that we’re receiving from key ministers in their departments within the Sudanese government. A small number of people have expressed reservations about our investment into them based on their knowledge of the country’s recent history. But I can genuinely say that we’ve received excellent — an excellent level of support from the government that clearly acknowledged that Perseus and the government are joined at the hip on this project, and that a successful development will be of enormous value to both parties. We’re also very comfortable with backing our ability to set up operations in the new country, just as we did in Cote d’Ivoire, with the development of Sissingué and Yaouré.
Now, at this time, we were targeting making the final investment decision for the Block 14 gold mine at about this time next year, if not a little bit before being conservative, it’s probably safer to say the second half of 2023 on the basis that this will be the very first industrial scale, gold mine development incident, and there’ll be no prize that Perseus committing capital prematurely. This project in all of the other opportunities that are starting to emerge as a result of our first mover advantage, interested in a way too important to mess up. And so, we will take whatever time is required to make sure that this project is a fantastic success not only for Perseus, but also for the people of Sudan.
Now, also, as we’ve recently announced, we’ve had exploration success close to our existing infrastructure in West Africa, and making pleasing progress towards being able to sustain our targeted level of production of 500,000 ounces of gold per year, out towards the end of the decade, and that’s without taking into account any M&A or greenfield development activities. During the quarter, we issued a market release detailing the results of work that had been completed at the e Nkosuo deposit, located about seven kilometers from Edikan mill in Ghana.
In summary, we mentioned we announced an Indicated Mineral Resource of 422,000 ounces and inferred. We’ve done a feasibility study on the project, and that resulted in probable ore reserves of about 332,000 ounces of gold. Based on this study, the processing of the Nkosuo ore reserves in the Edikan mill is expected to increase the life of the Edikan operation by something like 18 to 24 months extending the life as we see it at the moment out towards the end of fiscal ’27.
We’ve recently applied to the Ghanaian Minerals Commission for the land that was that is covered by the Nkosuo exploration license to be incorporated into our existing Nanakaw Mining Lease. Discussions on this round are progressing well and should result in [Inaudible] Nkosuo being mined and trucked ready can for processing sooner rather than later. The delineation of dismountable deposit in Nkosuo is actually a significant achievement for Perseus. I think Nkosuo is our first discovery on what we believe is a mineralized zone that stretches across three separate exploration license areas to the North of Edikan, Northwest of Edikan. In addition to recently exercising our option to buy the Agyakusu license on which Nkosuo is located, we’ve also given notice of intent to exercise options to acquire the other two license areas that are contiguous to our land and our land packages, as both of these have similar potential to the Agyakusu license. So that’s pretty exciting. We are committed to intensive exploration to this zone expecting that Nkosuo will turn out to be one of probably the first of several discoveries in the area. And if this the case, we can expect to see further extensions to the life of the Edikan operation coming up. And having recently invested a lot of time and effort and money into upgrading the Edikan plant that yielded the very good results this quarter. Edikan certainly has the potential to once again become an important part of our asset portfolio.
While on the subject of organic growth, I should also mention that we’ve continued to make excellent progress on the delineation of a large traditional mineral resource at the Yaouré that can be mined economically, using underground techniques underground mining techniques. During the quarter we announced a maiden ore reserve of about 259,000 ounces on the initial stages of mining of the CMA ore body by underground methods. The pre-feasibility study that we have completed on the drilled-out portion of this deposit extends about 200 meters down deep. And it’s proven to be to be both economic and technically viable to conduct that mining operation under the existing pit. We’ve got more widely spaced drilling below the pit that shows that the mineralization extends quite a lot further. In fact, the total mineral resource at the present time is about a million ounces, we will be drilling out the next 300 meters of the structure during the course of this year. So taking us down 500,000. And we do expect to be able to put that into the reserve statement towards the end of this year.
In addition to that, we’ve also got some returned some fairly encouraging results from exploration drilling of some deep holes below the non-mineralization. And that is certainly very interesting that we’ve been inspired to do that, from a result of a three-dimensional seismic survey that clearly shows us that something is down there, we’re not quite sure what it is. But it’s certainly giving us fairly high level of encouragement that further expansion of the CMA underground operation is very possible. It is early days as far as the CMA underground project is concerned. But I suspect that more will be said of this as the drill results come to hand in coming months.
So in conclusion, as I said, at the start of the call, the September quarter has been another outstanding quarter for Perseus on all fronts, including gold production, All-In Site Cost, cash flow generation and business development. We’ve delivered gold production and All-In Site Cost, put us well on track to achieve if not exceed, stated guidance ranges. And in doing so, we’ve outperformed a lot of our peers. Our All-In Site Cost are currently very competitive in terms of global measures. And we are managing our business successfully. Even though we are operating in a fairly tough economic environment, the present time. Perseus sees excellent growth potential in front of us. But as importantly, we have the team and the existing financial means to successfully execute and to unlock value as we have demonstrated several times in the recent past.
In an equity market, since our share price has been holding up fairly nicely in the face of some pretty stiff headwinds coming from the strength of the US dollar. But we are performing relatively well compared to the rest of the market, which I’d like to think is a recognition of the strong track record of achievement that we’ve built up over the last few years. So, as I say, a strong quarter for Perseus, we’re very pleased with the way things are tracking and looking forward to repeating this in future periods. So thanks very much for your attention today. This brings my presentation to close. And then my colleagues and I are happy to take any questions that you might have. Thank
Question-and-Answer Session
Operator
[Operator Instructions]
Nathan Ryan
Thanks, Jeff. Your first question comes from Mike Milligan at Euroz Hartleys, his questions regarding the uplift at Edikan in terms of new head grades and recoveries, he’s asked us is this all attributable to the maintenance completed last quarter? What improvements were made? And should we expect this going to continue going forward?
Jeff Quartermaine
The short answer is no. It really wasn’t related to the main purpose of the maintenance shutdown, which was to replace a woman [Inaudible]. The improvements are the result of we move further down in the ore body. So we’ve managed to eliminate some poor reconciliation, particularly using tighter grade control methods. And the other factor on recovery was that we cleaned out the CIO tanks during that while we were shut down, and we’ve managed to make that process a whole lot better, as do it going forward. Most certainly, we do expect to see this to be the norm in the future.
Nathan Ryan
Thank you, Jeff. Your next question comes from Reg Spencer at Canaccord.
Reg Spencer
Hi, perfect. Morning, Jeff. Good morning, everyone. Congratulations on a fabulous quarter. It’s just great to see. My first question relates to Yaouré under grant, Jeff. And I didn’t necessarily sorry, if we go back to that maiden reserve announcement very deep in the joke table. You did outline some production parameters there, which included 720,000 ton per annum of throughput, which based on that initial reserve would give you initial three year mine life, that material in that joke table also highlighted all-in sustaining costs at $1,250 to $1,300, at all-in sustaining costs, are you able to give me an idea of how we should think about the Yaouré able to grant schedule relative to the open pit, given the open pit all-in sustaining costs, while being lower grade are actually also low cost?
Jeff Quartermaine
Well, let me just — let me address that point. That’s a good one that you raised actually, that cost incorporates the capital cost of development of that underground operation. So all of the costs on the underground operation have been attributed to that first 200 meters. So as we go further, deeper into the end of the structure, the infrastructure will already be in place and that those ounces won’t carry that incremental cost. So as we go deeper, that cost is going to average down quite significantly, I would think. So that’s point one.
As to when it’s coming into the into the mine plan, we’re working through that specifically at the moment, but what the thinking is just in broad terms, in the original mine plan for Yaouré, I think the higher-grade ore from the CMA pit started to decline around year five or five and a half. And then we’d move over to Yaouré pit which is lower grade. And as a result of that, the production profile would have fallen, however, what we’ll be doing now is opening up that underground operation, bringing back hydrated material from that, and then blending that with the lower grade material from the Yaouré pit. So we’ll be able to maintain the current levels of production, which broadly are in the range of 250,000 to 300,000 ounces a year. I mean, it’s closer to 300,000 last year, for instance, but we’ll be able to maintain that sort of level of production for quite a few more years to come certainly out towards the end of the decade. And as the underground development continues. And as we continue to find more satellite pits adjacent to the infrastructure, and I think there’s a very high chance of that happening, the Yaouré operation as a whole, which will combine but open pit and underground mining will continue for quite a number of years to come.
Reg Spencer
But that’s very useful. Jeff, thanks very much. You guys released some exploration results or some of that deeper step at Yaouré that the under grade there say may which was pretty well, the results are very good. Is there any more updates with respect to ongoing depths extensions, or down deep extension?
Jeff Quartermaine
Not that I can really recall, specifically off the top of my head, I mean, there’s clearly something down there some alteration, that we aren’t getting grade in various intercepts. But I mean we weren’t expecting to make a bonanza discovery, often what we are doing is collecting very valuable information that will feed back into our structural model, which will then inform future drilling program. So, look this is you’re not going to be announcing bonanzas every time we make an announcement, this is all part of a long-term plan. And I think that the results overall speak for themselves, but it is going to take a bit of time to pull all this together, but it’s certainly looking extremely promising right now.
Reg Spencer
That certainly is. Thanks, Jeff. Next question relates to Block 14, are you able to let us know how much expenditure is planned for Block 14 is because that’s quite a large drilling program granted a lot of that sterilization drilling, what the expenditure might be at Block 14, between now and next quarter.
Jeff Quartermaine
Well, that will vary, well, actually, their drilling program is 100,000 meters, and it’s over 18 months. So it will continue for a while. Look, the amount of expenditure is going to depend on the level of rate of progress that we make. I mean, the sort of things that we would like to do before we start construction, for instance, would be to put in the water pipeline and gold field. So that’s about I think it’s about 20 odd million dollars, if I remember correctly, and also, we’d need to upgrade the camp because once we start constructing, we’re going to need to be housing quite a lot more people than we’re housing through these exploration phases. Now the decision to invest this incremental capital will be strictly related to progress that we make in country. Now, we are making very good progress, as I said, but we’ll sort of hold fire on those commitments until we’re absolutely certain that this project is going to go forward in the way that we envisage because we If we’ve learned nothing else over the last 10 years, what we have learned is that once you make a commitment and start spending money, you certainly lose any leverage that you might have in terms of negotiating with local communities and governments and things of that nature. So we’re working through this methodically, and we’ll make appropriate announcements as we make those steps forward.
Nathan Ryan
Your next question comes from Patrick Collier at Credit Suisse.
Patrick Collier
Thanks, Nathan. And, hi, Jeff. Congratulations on strong quarter. And the first question just on the decision not to change guidance. But appreciate it’s probably some conservatism there. But is there anything you’re expecting that could change in the second quarter? That might mean it’s not quite as strong as the first quarter or is that just old conservatism?
Jeff Quartermaine
Oh, conservatism that has a negative connotation, Patrick? Look, no, look, I mean, we’ve been around this business long enough to know that things can go well, and things can go poorly on a turn of a dime. So there’s no mileage in us going out on a limb on this week, are expecting don’t have another good quarter. But we’re not going to be making massive promises that we may struggle to deliver at the end of the day. There’s no point in that. We’ve given the market guidance. It’s been out there for a long time. We’ve said we will achieve it, and we will.
Patrick Collier
Okay. Thank you. And then just on Yaouré, you mentioned in the report, there’s been a bit of an issue with truck availability, which says it’s temporary, but just wondering if that’s at any follow-on effect into this quarter.
Jeff Quartermaine
No, that’s technically, I mean, the interesting thing is that we had in the June quarter, we had actually, and also much who had been mining ahead of schedule, expecting that we may be slowed down in the September quarter due to wet weather. Now, the wet weather certainly came and it certainly slowed us down as did the truck availability issue coincided with the wet weather. So it didn’t really have any impact on us in the long term. And in fact, we’re traveling pretty well now that the rain is at Yaouré at least has started to abate a bit. It’s actually started to abate at Sissingué too which is a major plus for us up there as well. But no, the truck issue hasn’t really knocked us around in any shape or form.
Patrick Collier
Okay, good to hear. And then yes, on Sissingué that’s my next question. A good quarter and certainly cash generative, but just wondering what the broader strategy is, given the group’s US$400 an ounce margin target where spot gold is, where things are only starting costs are? Just wanted to know —
Jeff Quartermaine
No, okay. Well, if I should say that, knowing full well that we were going to go through a higher cost period now, thank you for asking me this question by the way, knowing full well that we were going to go through a higher cost period now, while we are developing access roads and infrastructure for the Fimbiasso SA deposit. And later, Bagoé deposits, which will progressively develop and mine and bring back, we did actually take out some hedging at around, I think there was $1,950 an ounce to cover production during this period of high costs. So in fact, the margins that we’ve locked in through the hedge program are pretty darn healthy given what we’re actually producing at and what we’re selling. And of course, US$1,950 looks pretty fancy when you learn it up against the spot price today.
Patrick Collier
Yes, for sure. Thank you. And then, just lastly, on the M&A front, I guess valuations have probably come off a little bit and just wondering what you’re seeing there and any opportunities that you’re looking at, or just the broader strategy?
Jeff Quartermaine
Yes. Develop of any, our broader strategy is, we would like to have about three to four mines in our portfolio with 10-year mine lives ahead of us, which relates to 10 to 12 million ounces in reserve. At the present time, Yaouré and Block 14 certainly fall into that category. And with some success, Edikan exploration, more exploration success, Edikan could, but I think we do need if we want to achieve that objective, we’re going to need to bring some more assets into the portfolio. Now the fact that the market is down at the moment doesn’t necessarily mean that the management teams of the companies whose shares prices are struggling are any more motivated to transact than they were before. So that is the social issue is something that always stands in the way. The other thing I would say is that look from outside a lot of situations look very, very good because the people who are promoting them, make sure that all of the good things are known in the market. What they don’t always share with the market is some of the things that are not so good. But as a company, we do very, very detailed bottom-up due diligence. And quite often, we have been quite enthused about opportunities only to find out that things weren’t quite as good as we had all hope. So look, we will continue to look at opportunities, we are very open to opportunities. We have the financial and human capacity to execute opportunities as they come through. But we will maintain very strict financial discipline in choosing what how we deploy our capital going forward.
Nathan Ryan
Thank you. Your next question comes from Andrew Bowler at Macquarie.
Andrew Bowler
Good morning, Jeff and team. A lot of questions were already been asked. I think just a couple of times was mentioned in the quarterly about seasonal, wet weather and that sort of stuff in the past that’s been troublesome to Perseus. Can you just fill us in with a bit more detail more broadly on how Perseus preparing differently for wet seasons? Or if it’s just a result of getting deeper in those pits?
Jeff Quartermaine
Yes, look, it largely is the latter. I mean if you take, for instance, last wet season at Yaouré, you we didn’t have an awful lot of hard materials around the sheet roads, we were able to shoot some of the roads, but not all of them. By the time the wet season hit. But we’re in much better shape this year. Same thing, I mean, Edikan has, when it rains, they provide, we’ve got pumping capacity, which we do, we’re not impaired in any major made to any major extent. Sissingué, we had dreadful travel when we first started that up back in 2019, I think it was when we were in oxide, and it rained like blazers, and we had no material to sheet roads. But since then, material has come available and the roads and run pads et cetera, et cetera, have been able to be managed more appropriately. So, it really is a case of having the right materials available to build your roads properly, and to make sure that your vehicles can move safely at all times, irrespective of the weather conditions.
Andrew Bowler
Thanks. And just last one from me, obviously you mentioned the large pooling build over the quarter. And I think, from the comments previously said, part of that might have been approvals to get money out of country. Can you just elaborate a little bit on that? And what’s the process there? And how long’s that sort of expected taken. And expecting, it’s all flowed through sort in this quarter, or some of it into next quarter as well.
Jeff Quartermaine
No, it will be done this quarter. In fact, I think most of the approvals are already in place, I mean Lee-Anne could correct me on that. But I think that, I think we’re in pretty good shape. And look, it’s just a case of making sure that everybody knows what’s happening, and that everyone is aware, I mean, if you were to if we for instance, we were to bring money in and try to move it out, we will every time you bring money in and out of countries, you experience, exchange risk and potential leakage depending on the rates that you’re getting. And then of course, if you’re sitting with lots of cash, and you’ve got intercompany debts to repay, but you then dividend money then you’re paying withholding tax on dividends, et cetera, et cetera. So this is really just about prudent financial management, it’s about making sure that we move our funds around as efficiently as possible and in the full knowledge of our host countries, because everything that we do is 100% transparent, and we want to make sure that everyone’s comfortable with those things.
Now, this was just a situation that we needed to manage. But by the end of the year, there will be a lot more cash on the balance sheet as a result of having closed out those hedges.
Andrew Bowler
No, sorry. Just a final follows up, I guess, just more broadly, you haven’t seen nearly the cost inflation outside of Australia, can you just comment a little bit more about how that’s played out over the last few months or so, and how supply chains in and out of Africa are going and labor constraints and that sort of stuff. Are you still having a good time, I guess, compared to this?
Jeff Quartermaine
Well, I don’t know about that necessarily. Look, it’s a daily battle. And we work very hard at keeping a lid on our costs. I mean, we, I don’t think we have had the same labor issues in West Africa or as perhaps Australia where flying [Inaudible] has been an issue for a number of the West Australian mines and lots of the workforce. I think in Africa, the African countries where we operate, people are very pleased to have their roles and want to keep them and they’re keen to keep working. So that is — that’s one fact that are working in our favor. I mean, that said, our workers do want to be compensated appropriately for their labors, and they are. So we do see some cost inflation from time to time and supply chains are reasonably good. There have been periods in the past where we’ve perhaps had to hold more space than we might have otherwise done just to make sure that we don’t run out but generally, that’s okay. Fuel, we are the beneficiaries of a subsidy of fuel in Cote d’Ivoire, the government subsidizes diesel right across the board. So the price we’re paying in Cote d’Ivoire is not as high as it is in Ghana, for instance. Ghana has about $1.50-ish a liter and I think Cote d’Ivoire is about $1-ish a liter at the present time. Now that that subsidy won’t last forever, I’m sure. And that ultimately, we will be seeing some cost inflation on the fuel side of things. I guess the other area where we’ve been shielded to a degree is in consumables, we have been operating under some long-term supply contracts. And inevitably, in the future, those contracts will run off and need to be replaced. Now, at that particular time we’ll be in the market for product and we’ll be facing the same issues that that some of our competitors are dealing with. But look, the point is this that there is cost inflation out there. Anybody who says there isn’t hasn’t looked recently at the financial statements. But the task for us as managers is to do everything, we can to make sure that we’re operating as efficiently as possible. And that at best we can staying, maintaining our position, we may see some inflation into the future.
Nathan Ryan
Thank you. Your next question comes from Alexander at Citi.
Alexander Paap
Hi. Jeff and team, congratulations on another strong quarter. Can you remind me on the next key milestones at Block 14 ahead of FID?
Jeff Quartermaine
Oh, the next key milestones Well, there’ll be progressive drill results come through. And the results from the board tests and things of that nature. I think I guess the next milestones will be when we make decisions around starting to invest in infrastructure. There’s say this, there’s a lot of work going on in the background product, now this is a period where I guess there isn’t an awful lot of news and photographic evidence of our progress. But a lot will be happening under the surface, I can assure you.
Alexander Paap
Perfect. And when can we expect an updated law for mine plan for the Yaouré including the final integrated CMA, underground ore reserve?
Jeff Quartermaine
Well, look, we, I’d like to say that there will be some time in this year, it really depends on how well the infill drilling goes and things of that nature, there’s not a lot of point in putting out an updated life of mine plan on the first 200 meters. But we could do that. Certainly we could do that now, I guess, one of the issues that we’re not 100% clear on is the exact timing of the starting of the underground mining. That’s something that we’re trying to work through at the moment to figure out exactly when the optimal timing for that would be in terms of the trade off on pushing deeper into the pit versus doing development and moving into the underground. So there are things that we’re working through, but it can be said, and we’ll inform the market as soon as we have worked the right answers, but we won’t be coming out half cooked.
Nathan Ryan
No further questions. So I’ll now hand back to Jeff for closing remarks.
Jeff Quartermaine
Okay, well, thanks, Nathan. And thanks, listeners for tuning in. And for those people who have asked questions, it has been a strong quarter, we’re very pleased with it. We would like to think that we will continue in this vein going forward. I do make the observation, though, that there are headwinds out there both in terms of gold pricing, we’re reasonably bladed on that front with our hedge book, and on the cost front as well and on that, and that area we’re working furiously to hold the line. But look, things are going well. And certainly we’re fairly consistent in our performance, and we’re comparing recently well to our peer group.
So I think on that basis, we’ve had a good quarter and we’re reasonably comfortable with this. Thank you very much. And we look forward to talking to you again in a couple of weeks on firstly on sustainability and then our next round of results in about three months’ time. So thank you very much.
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