PERTH, WESTERN AUSTRALIA–(Marketwired – Dec. 15, 2016) –
NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
Perseus Mining Limited (TSX:PRU) (ASX:PRU) wishes to provide an update on recent events associated with its West African gold production and project development activities.
EXECUTIVE SUMMARY
- The capital investment programme that Perseus has undertaken at the Edikan Gold Mine in Ghana (“Edikan”) during the last two years is now largely complete.
- Notwithstanding recent improvements in mill and crusher performance, the shortfall of gold production due to the extended plant shutdown in October 2016 and lower than expected head grades, has not been recovered and gold production from Edikan for the December 2016 Half Year is now expected to be between 70 -80,000 ounces and all in site cost (“AISC”) for the period are now expected to be between US$1,550 to US$1,650 per ounce.
- Work on the Yaouré Gold Project (“Yaouré”) definitive Feasibility Study (“DFS”) currently remains on track for completion in mid-2017. Discussions with landowners have been constructive to date and a mutually satisfactory solution is expected to be reached in time for Mineral Resource confirmation drilling to start by the end of December 2016.
- Snowden Mining Industry Consultants Pty Ltd (“Snowden”) has completed a re-estimate of the Sissingué Gold Project (“Sissingué”) Mineral Resource and maiden Mineral Resource estimates for the Bélé mineral deposits that are located within trucking distance of Sissingué.
- The re-estimated Measured and Indicated Mineral Resource at Sissingué contains approximately 180,000 ounces or 20% less gold than previously estimated as a result of discounting a quantity of reverse circulation (“RC”) drill results due to drill hole contamination.
- Depending on the conversion rate of Bélé’s Inferred Mineral Resource into Measured and Indicated categories, the combined Measured and Indicated Mineral Resource for Sissingué and Bélé may be very similar to the original Sissingué estimate of 880,000 ounces of gold.
- Pending confirmation of the total Sissingué plus Bélé Measured and Indicated Mineral Resource, Perseus intends to reduce the level of project debt finance sought to finance the construction of Sissingué and increase the proportion of development funding from cash flow and cash reserves.
- Perseus has implemented a plan to align Sissingué project development expenditure more closely with available funding capacity and as a result, the projected date of production of first gold from Sissingué has been moved back approximately 4 months from October 2017 to the end of February 2018.
EDIKAN GOLD MINE, GHANA
Completion of Capital Works
The capital investment programme that Perseus has undertaken at Edikan during the last two years, that has been a major factor in elevating the mine’s AISC during this period, is now largely complete. Since 1 October 2016:
- Construction of housing and the relocation into the new dwellings of families displaced by the opening up of the Fetish, Chirawewa and Esuajah North open pits has been completed. In total, 186 new houses and 12 institutional structures has been constructed at a cost of approximately US$30 million. A ceremony to formally hand over the new housing estate will take place in January 2017.
- Development of the Esuajah North open pit has been advanced and fresh ore is now being mined from the pit. Blasting of fresh ore commenced on 26 November, and in coming months ore will be drawn from four pits on the Edikan licence area including Fobinso, Fetish, Chirawewa and Esuajah North. With the opening up of these work areas, the amount of investment required in waste stripping will materially reduce in coming months.
- A US$9.0 million programme of capital works aimed at upgrading Edikan’s crushing and milling circuits to increase availability and reduce maintenance costs and time has been completed. As frequently occurs when remedial works are started, the scope of work required was expanded to address unforeseen issues that emerged while the remedial works were being undertaken. This increase in scope led to the mill being shut down for 6 days longer than the originally scheduled 9 day shut-down period. Following the completion of the works, the mill run time has significantly improved and for the month of December to date, run time in excess of 94% has been achieved which compares very favourably with run time recorded in prior periods and well in excess of run time assumptions built into the Edikan life of mine plan.
Production Guidance
Notwithstanding improvements in mill and crusher performance since the completion of the remedial works in October 2016, the shortfall of gold production due to the extended shutdown has not been recovered in December 2016 to date and as a result of this, combined with lower than forecast head grade of processed ore, gold production from Edikan in the December 2016 quarter will be lower than expected. As a consequence, production for the December 2016 Half Year will be below previous guidance of 80,000 to 100,000 ounces, and is now expected to be between 70,000 and 80,000 ounces. Production guidance for the June 2017 Half Year of 125-145,000 ounces of gold remains unchanged at this time. As a result of the expected reduction in gold production, it is anticipated that Edikan’s AISC (which includes production costs plus royalties plus all sustaining and development capital costs) for the December Half Year will increase on a per ounce basis and may fall outside of the cost guidance range. The AISC for the December 2016 Half Year is now forecast to be between US$1,550 to US$1,650 per ounce.
YAOURÉ GOLD PROJECT
Definitive Feasibility Study
Work on the Yaouré DFS currently remains on track for completion in mid-2017, but achievement of this target is contingent on the timely completion of a 42,000 metre Mineral Resource definition drilling programme, the commencement of which has been delayed pending agreement of compensation arrangements for landowners who will be potentially impacted by the proposed development.
Discussions with landowners have been constructive to date with a specially constituted Landowner Compensation Committee, comprising representatives of landowners, the Company and the government in place. It is expected that a mutually satisfactory solution will be reached in time for drilling to commence prior to the end of December 2016.
Extension to Exploration Permits 168 and 397
The terms of Exploration Permits 168 and 397, the two tenements in which the Yaouré gold deposits are located, have been extended for a period of two years from 1 December 2016. It is expected that within this two year period, Perseus will complete a DFS for Yaouré, negotiate a Mining Convention and will have applied for and been granted an Exploitation Permit for the development of Yaouré.
SISSINGUÉ GOLD PROJECT
Sissingué Mineral Resource Estimate
The initial estimate of Mineral Resources for the Tengréla Gold Project (or Sissingué as it is now known) was prepared in July 2010 by mining consultants Runge Limited (“Runge”) in accordance with the 2004 Australasian Code for Reporting of Mineral Resources and Ore Reserves (JORC Code).
As a part of Perseus’s strategic review of Sissingué completed in early 2015, Snowden were tasked with revising a preliminary Mineral Resource estimate prepared by them in June 2013 in accordance with the 2012 Australasian Code for Reporting of Mineral Resources and Ore Reserves (JORC Code) and the CIM Definition Standards (CIM, 2005), taking into account newly acquired mining and metallurgical data. The results of this estimate, that was prepared as at October 2014, were as follows:
Table 1: Sissingué Mineral Resource Estimate – May 2015
| Mineral Resource Category | Quantity (‘000 tonnes) |
Grade (grams per tonne) |
Contained Gold (ounces) |
| Measured | 4,800 | 2.4 | 370,000 |
| Indicated | 11,000 | 1.4 | 510,000 |
| Measured + Indicated | 16,000 | 1.7 | 880,000 |
| Inferred | 1,100 | 1.7 | 63,000 |
This Mineral Resource estimate was used by Perseus as a basis for estimating an Ore Reserve and preparing a DFS for Sissingué in April 2015. Based on this DFS, Perseus decided, subject to financing, to proceed with the full scale development of Sissingué.
In anticipation of discussions with prospective debt financiers, Perseus undertook a review of the drill database that was used by both Runge and Snowden as a basis for the previous Mineral Resource estimates for Sissingué. This internal review identified a number of wet RC drill holes with possible downhole contamination that could potentially cause overstatement of the gold grade in specific holes or parts of holes. To determine the impact of the contaminated drill results on the Sissingué Mineral Resource estimate, Perseus undertook a drilling programme comprising 64 holes for 6,587 metres of diamond drilling programme. This programme and associated assaying was recently completed and Snowden has reviewed both the new and old drill data, and confirmed that contamination had occurred in some previous RC drill holes.
The contaminated data were withdrawn from the drill database and replaced with the new diamond drilling data. Snowden was then requested to re-estimate the Mineral Resource using the updated drill database.
The revised Mineral Resource estimate prepared by Snowden was reported in accordance with the 2012 Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code). Refer to Appendix 1 of the full press release on www.perseusmining.com or www.sedar.com for Snowden’s assessment of the JORC Table 1 assessment criteria. The Mineral Resource estimate is summarised in the following table that reports the Mineral Resources by category and area, above a 0.6 g/t gold cut-off grade. The classification categories of Inferred, Indicated and Measured under the JORC Code (2012) are equivalent to the CIM categories of the same name (CIM, 2010).
In summary, the updated global Measured and Indicated Mineral Resource for Sissingué is now estimated as 13.0 Mt grading at 1.6 g/t gold, containing 700 kozs of gold. A further 0.9 Mt of material grading at 1.9 g/t gold and containing a further 58 kozs of gold are classified as Inferred Resources. Details of these estimates are shown below in Table 2.
Table 2: Sissingué Mineral Resource Estimate – December 2016
| Category | Area | Tonnage (‘000t) |
Grade (g/t Au) |
Contained Gold (koz) |
| Measured | Oxide | 780 | 1.9 | 48,000 |
| Transitional | 590 | 1.9 | 36,000 | |
| Fresh | 2,900 | 2.1 | 200,000 | |
| Total Measured | 4,300 | 2.1 | 290,000 | |
| Indicated | Oxide | 2,400 | 1.3 | 100,000 |
| Transitional | 670 | 1.4 | 29,000 | |
| Fresh | 5,900 | 1.5 | 280,000 | |
| Total Indicated | 8,900 | 1.4 | 410,000 | |
| Measured + Indicated | Oxide | 3,200 | 1.5 | 150,000 |
| Transitional | 1,300 | 1.6 | 66,000 | |
| Fresh | 8,800 | 1.7 | 480,000 | |
| Total Measured + Indicated Resource | 13,000 | 1.6 | 700,000 | |
| Inferred | Oxide | 230 | 1.2 | 8,500 |
| Transitional | 57 | 1.0 | 1,800 | |
| Fresh | 660 | 2.3 | 48,000 | |
| Total Inferred Resource | 940 | 1.9 | 58,000 | |
Notes: Mineral Resources are inclusive of Ore Reserves. Mineral Resources are reported to two significant figures. Rounding may cause minor discrepancies in the table. Oxide includes small portions of laterite (115 kt total).
Geology
The Sissingué deposit is defined by a 4 km long and up to 1.5 km wide gold-in-soil anomaly situated on the Syama-Boundiali Greenstone Belt. Rocks encountered in outcrops and drilling comprise predominantly north-northeast striking, steeply west dipping and isoclinally folded metasedimentary rocks (sandstones, mudstones and subordinate conglomerates) of the Birimian Supergroup. The metasedimentary rocks are cross cut by a swarm of narrow porphyritic dykes (sub-metre to several metres thick) that trend obliquely to the sedimentary package northwest with sub-vertical or steep to moderate dips towards the east. The area of the main Sissingué resource also features two irregularly shaped granitic bodies that appear to pre-date intrusion of the porphyritic dykes.
Gold mineralisation at Sissingué is hosted by the porphyritic dykes, by the granitoid rocks and by coarser grained beds (sandstones and conglomerates) in the metasedimentary rocks proximal to the intrusive bodies. Mineralisation occurs as disseminations of pyrite and lesser arsenopyrite in sericite-carbonate alteration zones. Highest gold grades are typically associated with spaced quartz-carbonate veins and increased concentrations of arsenopyrite.
Drilling Techniques
The input dataset used for the Sissingué Mineral Resource estimate contained 1,654 reverse circulation (RC) drill holes for 122,889 m, 379 diamond drill holes for 77,055 m and 18 diamond drill holes with RC pre-collars for 2,163 m.
RC drilling (5 1/4″ diameter) was usually 80 m or less in depth. Generally RC holes have only the collar azimuth and inclination measured.
Diamond drilling was HQ diameter in weathered rock and NQ in fresh rock. All diamond holes are downhole surveyed at 30 m intervals. 43 holes were oriented by core spear and 217 holes were oriented by an “AceTool” device.
The steep nature of the mineralisation and sometimes limited drill access meant that holes were at a moderate to low angle to the mineralisation. True thickness of intersections is typically half the downhole thickness.
Sampling
All RC samples were collected at the drill site at 1 m intervals and split using a multi-stage riffle splitter. Each two consecutive samples were composited (where applicable) in one bag. Sample weights were nominally 2.5 kg and 5 kg for 1 m and 2 m samples respectively.
Diamond core was sawn in half using a motorised diamond blade saw, with the right half sent for assaying and the left half stored in core trays for reference. 1 m samples were taken in fresh material and 1.5 m in oxide and transition.
Both core and RC samples followed a sample preparation path involving drying, crushing and grinding. Samples were pulverised with a ring mill and thoroughly mixed on a rolling mat (“carpet roll”), and then 200 g of sub-sample was collected. Internal laboratory checks required at least 90% of the pulp passing -75 microns. A 40 g to 50 g charge was produced for subsequent analysis of gold by fire assay.
Perseus observed that core and RC samples showed very acceptable recoveries. Some RC samples at depth were identified as having downhole contamination and resultant smearing of grades as a result of wet drilling in ‘sticky’ material, with the samples being ‘hung up’ in the cyclone and subsequently contaminating later samples.
As a result of this, all RC holes in the pit area were reviewed and any suspected of containing smeared assays were removed from the dataset prior to estimation. Approximately 5% of RC samples were removed due to suspected downhole contamination. In addition, 2016 drilling focused on diamond drill holes to confirm areas with RC drilling in the core of the deposit.
With the exception of the issue noted above, Snowden and Perseus consider the sub-sampling is appropriate and representative.
Sample Analytical Methods
Three analytical laboratories have been used to assay samples from the Sissingué project: ALS Chemex Laboratories (Bamako, Mali), Intertek Minerals Ltd (Tarkwa, Ghana), and Bureau Veritas Minerals Laboratory (Bamako, Mali and Abidjan, Côte d’Ivoire).
Two types of analysis for gold were performed, a standard fire assay using a 40 g to 50 g sub-sample, and BLEG (bulk leach extractable gold) bottle roll using a 1 kg sub-sample. Both methods were read by AAS with a detection limit of 0.01 g/t Au.
The first 26 RC holes were analysed by bottle roll, however, analysis of the tails showed that, on average, 20% of the gold was not recovered with this method. Subsequently, almost all samples were analysed by fire assay. In total, 3,168 RC samples and 154 diamond core samples (from 2 drill holes) were analysed by bottle roll.
Certified reference material (blanks and standards) were submitted into the sample stream at a rate of 1 in 20 to 25 samples (1 in 50 prior to 2008). Duplicate samples of RC chips were taken at a rate of 1 in 25. QAQC shows no bias, but only moderate reproducibility, particularly at high grades. This is as expected given the nugget mineralisation.
Estimation Methodology
The Mineral Resource was estimated using ordinary kriging and multiple indicator kriging using CAE Studio (Datamine) software.
Estimation was constrained within mineralisation envelopes (wireframes) based on geological logging and grade thresholds. The three main host lithologies are granite, porphyritic dykes and sediments. Where geological contacts were not clearly controlling the distribution of mineralisation, a grade cut-off of 0.3 g/t Au was used to construct domain boundaries. Analysis of the global grade distribution shows that there is a natural change in grade population at around 0.3 g/t Au.
Due to the highly skewed nature and mixed populations evident in the granites and sediments, multiple indicator kriging (MIK) was used to estimate gold grades.
Ordinary kriging with top cuts was used to estimate the lower grade dyke domains. A dynamic anisotropy approach was used, whereby the true dip and azimuth of the mineralised lodes was estimated into each block in the model and the search and variogram orientations were locally adjusted to reflect the geological orientation. This method allows the estimate to better reflect the changing orientation and undulating nature of some of these dykes along strike.
Parent block dimensions of 10 mE by 10 mN by 5 mRL were used for estimation. All samples were composited to 2 m prior to estimation.
Criteria for Mineral Resource Classification
The Sissingué Mineral Resource has been classified in the Measured, Indicated and Inferred categories, in accordance with the 2012 JORC Code and the CIM Definition Standards (CIM, 2005). A range of criteria has been considered in determining this classification including geological and grade continuity, data quality and drill hole spacing.
The key classification criteria are described as follows:
- Geological continuity is understood with reasonable confidence. The classification reflects this level of confidence. Porphyry lithologies (dyke domains) were limited to Inferred and Indicated categories due to the mostly narrow nature of the mineralised bodies and consequently their sensitive geometry.
- Resource classification is based on information and data provided from the Perseus database. Descriptions of drilling techniques, survey, sampling, sample preparation, analytical techniques and database management/validation provided indicate to Snowden that data collection and management is well within industry standards. The database represents an accurate record of the drilling undertaken at the project.
- Drill hole location plots have been used to ensure that local drill spacing conforms to the minimum expected for the various resource classification categories.
- The Measured category requires a drill spacing of 20 m by 20 m or closer.
- The Indicated category is confined to areas where drill spacing is greater than 20 m by 20 m, but nominally up to 20 m (east-west) by 40 m (north-south) spacing. In the dyke domains, in addition to the drill spacing constraints, a minimum of two drill hole intercepts per drill section is required.
- The Inferred category is assigned to all other estimated blocks within the potentially economic areas of the deposit.
- Trial optimisation was run on the 2014 Mineral Resource at a USD2,400 gold price to define the base of potentially economic open-pittable material. All blocks outside this shell are unclassified. Snowden considers that this shell is also appropriate to constrain the 2016 Mineral Resource.
- Snowden considers the estimation technique and parameters appropriate for this style of mineralisation.
Cut-Off Grade
The reporting cut-off is based on optimisation studies carried out by Perseus as part of the 2010 Feasibility Study, which have suggested that the deposit can be economically extracted at a gold cut-off in the range 0.4 g/t to 0.6 g/t.
Mining and Metallurgical Methods and Parameters
Trial open pit optimisation was run on the 2014 Mineral Resource in Whittle at a USD2,400 gold price (approximately double the current spot price) to define the base of potentially economic open-pittable material for the Mineral Resource.
The metallurgical work carried out to date indicates that gold can be satisfactorily recovered from Sissingué ore using conventional CIL extraction techniques. The work is considered sufficient to determine that the Sissingué resource represents a deposit capable of economic extraction.
Bélé Mineral Resource Estimate
In conjunction with the re-estimation of the Sissingué Mineral Resource, Snowden was also requested to estimate the Mineral Resources contained in the Bélé mineral deposit that was drilled with a series of RC and diamond drill programmes during the period from 2013 to 2016. Snowden’s resource estimate was prepared in accordance with the 2012 JORC Code. (Refer to Appendix 2 of the full press release on www.perseusmining.com or www.sedar.com for Snowden’s assessment of the JORC Table 1 assessment criteria. The Mineral Resource estimate is summarised in the following table that reports the Mineral Resources by category and area, above a 0.8 g/t gold cut-off grade. The Inferred classification category under the JORC Code (2012) is equivalent to the CIM category of the same name (CIM, 2010).
The Bélé deposit comprises two main areas of mineralisation: Bélé East and Bélé West. In summary, the global Inferred Mineral Resource for Bélé East and West is estimated as 5.2 Mt grading 1.6 g/t gold, containing 260 Kozs of gold. Details of these estimates are shown below in Table 3.
Table 3: Bélé Mineral Resource Estimate – December 2016
| Category | Area | Tonnage (kt) |
Grade (g/t Au) |
Contained Gold (koz) |
| Bélé WestInferred | Laterite | 2,800 | 1.5 | 140 |
| Completely oxidised | 400 | 1.4 | 18 | |
| Partially oxidised | 160 | 1.3 | 7 | |
| Moderately weathered | 130 | 1.5 | 6 | |
| Transitional | 35 | 1.6 | 2 | |
| Fresh | 11 | 1.6 | 1 | |
| Total Bélé West | 3,500 | 1.5 | 170 | |
| Bélé EastInferred | Laterite | 1,300 | 1.6 | 68 |
| Completely oxidised | 150 | 1.7 | 8 | |
| Partially oxidised | 57 | 1.7 | 3 | |
| Moderately weathered | 120 | 1.6 | 6 | |
| Transitional | 33 | 1.5 | 2 | |
| Fresh | 13 | 1.5 | 1 | |
| Total Bélé East | 1,700 | 1.6 | 88 | |
| Total Inferred | Laterite | 4,100 | 1.6 | 210 |
| Completely oxidised | 550 | 1.5 | 26 | |
| Partially oxidised | 220 | 1.4 | 10 | |
| Moderately weathered | 240 | 1.6 | 12 | |
| Transitional | 68 | 1.5 | 3 | |
| Fresh | 23 | 1.5 | 1 | |
| Total Inferred Resource | 5,200 | 1.5 | 260 | |
Notes: Mineral Resources are inclusive of any Ore Reserves. Mineral Resources are reported to two significant figures. Rounding may cause minor discrepancies in the table.
Geology
The Bélé gold deposits are located within a north-westerly striking splay off the Syama-Boundiali Greenstone Belt. At Bélé, Birimian aged rocks comprise a sequence of metasedimentary rocks and subordinate mafic volcanics that have been intruded by a nearly circular granitoid body approximately 4 km in diameter. The sequence has also been intruded by numerous felsic dykes of various compositions.
Gold mineralisation at both Bélé East and Bélé West is associated with deformation zones developed at and adjacent to the margins of the granitoid intrusion. Gold is associated with disseminated pyrite and lesser pyrrhotite hosted by both mafic and felsic lithologies where they feature chlorite-sericite-calcite alteration. Vein-hosted mineralisation is rare.
Bélé West mineralisation is interpreted to extend around 1 km in strike, 140 m across strike and to a depth of 150 m. Bélé East mineralisation extends around 500 m along strike, 150 m across strike and to a depth of 170 m. The currently defined mineralisation in both areas is open at depth but appears to be closed out along strike.
Drilling Techniques
The Bélé drill hole data includes RC, diamond and aircore drill holes. Aircore drill holes were used as a guide to interpretation but were not used for estimation due to the poor quality of aircore samples.
Drilling includes 834 aircore drill holes for 22,103 m, 257 RC drill holes for 21,763 m and 23 RC drill holes with diamond tail for 3,374.72 m.
RC drilling (5 1/4″ diameter) was usually 80 m or less in depth. Generally RC holes only have the collar azimuth and inclination measured.
Diamond drilling was NQ diameter in fresh rock only. All diamond holes are downhole surveyed at 30 m intervals. Downhole surveys were conducted by the drill contractors using a FlexIT tool.
Orientation of drill holes is approximately perpendicular to the strike of the geology and mineralisation at Bélé West. At Bélé East, drill holes are angled to cross the steep dip of the geological domains. At Bélé East, 12 early RC holes have been drilled along exploration fences oriented towards the east and hence sub-parallel to the mineralisation. Three of these holes intercepted significant mineralisation. These intercepts have been verified by holes drilled in the opposite direction.
Sampling
All RC samples were collected at the drill site at 1 m intervals and split using a multi-stage riffle splitter. Each two consecutive samples were composited (where applicable) in one bag. Sample weights were nominally 2.5 kg and 5 kg for 1 m and 2 m samples respectively.
Diamond core was sawn in half using a motorised diamond blade saw, with the right half sent for assaying and the left half stored in core trays for reference. 1 m samples were taken in fresh material and 1.5 m in oxide and transition.
Both core and RC samples followed a sample preparation path involving drying, crushing and grinding. Samples were pulverised with a ring mill and thoroughly mixed on a rolling mat (“carpet roll”), and then 200 g of sub-sample was collected. Internal laboratory checks required at least 90% of the pulp passing -75 microns. A 40 g to 50 g charge was produced for subsequent analysis of gold by fire assay.
Perseus observed that core and RC samples showed very good recoveries. Given the issues with downhole contamination in the RC drilling at the nearby Sissingué deposit, there is currently diamond drilling underway at Bélé to confirm the RC results. This drilling is expected to be completed at the end of 2016.
With the exception of the potential issue noted above, Snowden and Perseus consider the sub-sampling is appropriate and representative.
Sample Analytical Methods
All sample preparation and assaying was carried out by Bureau Veritas Minerals Laboratory (BVML), an independent commercial laboratory in Abidjan, Côte d’Ivoire with the head office in Paris, France.
Two types of analysis for gold were performed, a standard fire assay using a 40 g to 50 g sub-sample, and BLEG bottle roll using a 1 kg sub-sample. Both methods were read by AAS with a detection limit of 0.01 g/t Au. The first 13 RC holes were assayed by 1 kg 24-hour bottle roll, with all subsequent diamond core and RC samples assayed by 50 g fire assay.
Certified reference material (blanks and standards) were submitted into the sample stream at a rate of 1 in 20 to 25 samples. One to two duplicate samples of RC chips were taken from each drill hole. QAQC shows no bias and overall assaying quality is considered adequate by Perseus. Snowden has not independently reviewed the QAQC for Bélé.
Estimation Methodology
The Mineral Resource was estimated using CAE Studio (Datamine) software. Estimation was constrained within mineralisation envelopes (wireframes) defined based on a nominal 0.2 g/t Au to 0.5 g/t Au cut-off together with the geological logging and lithology interpretation. The cut-off used for the interpretation is observed as a population change in the global log-probability plot. The mineralisation domains were used as hard boundaries to control estimation.
Estimation of gold grades was carried out using ordinary kriging with top cuts applied to limit the influence of outliers. Parent blocks of 10 mE by 10 mN by 5 mRL in Bélé West and 10 mE by 10 mN by 10 mRL in Bélé East were derived from a kriging neighbourhood analysis together with the geometry of the orebody.
Dynamic anisotropy was used for estimation, whereby the local dip and azimuth of the mineralised lodes was estimated into each block in the model and the search and variogram orientations were locally adjusted to reflect the geological orientation. This method allows the estimate to better reflect the changing orientation and undulating nature of the lodes.
Criteria for Resource Classification
The Bélé Mineral Resource has been classified as an Inferred Mineral Resource, in accordance with the 2012 JORC Code and the CIM Definition Standards (CIM, 2005).
Cut-Off Grade
The Mineral Resource has been reported by resource classification and weathering above a 0.8 g/t Au cut-off. The reporting cut-off is based on preliminary engineering work which indicates a 0.75 g/t Au to 0.85 g/t Au cut-off will be applicable for mining, depending on the degree of weathering.
Mining and Metallurgical Methods and Parameters
The metallurgical work carried out to date indicates that gold can be satisfactorily recovered from Bélé ore using conventional CIL extraction techniques as per the nearby Sissingué deposit. The work is considered sufficient to determine that the Bélé resource represents a deposit capable of economic extraction.
As shown above, at this stage Snowden has classified all of the Bélé Mineral Resources as Inferred until a comprehensive assessment of the drill data is completed to confirm its veracity. Further core drilling is currently in progress at the Bélé East and Bélé West deposits to infill the Mineral Resource to allow Measured and Indicated Mineral resources to be defined, to validate the existing RC drill data and to complete some extensional drilling. It is expected that this drilling will be completed by the end of December 2016. The Mineral Resource estimate will then be updated and an initial Ore Reserve estimate for the Bélé deposits is expected to be produced in the first quarter of 2017. Metallurgical test work has been completed on the Bélé ore types, with recoveries and costs expected to be similar to those for the Sissingué ore types.
Implications of Sissingué and Bélé Mineral Resource Updates
Based on the above estimates, it is apparent that the gold content of the Measure and Indicated Mineral Resource at Sissingué has been reduced by approximately 180,000 ounces or 20% as a result of a decision to discount a quantity of drill results due to drill hole contamination. However, depending on the conversion rate of the Bélé Inferred Mineral Resource into Measured and Indicated categories, the combined Measured and Indicated Mineral Resource for Sissingué plus Bélé and may be very similar to the original Sissingué Measured and Indicated Mineral Resource estimate of 880,000 ounces.
Based on preliminary optimisation studies on the Sissingué Mineral Resource, it appears likely that the approximately 20% metal shortfall in the Mineral Resource will translate to a reduction in the Sissingué Ore Reserve of a similar order of magnitude, although until detailed mine planning based on recently tendered mining costs and other revised mining and processing parameters is completed, this assessment cannot be confirmed.
In addition to the drilling programmes that are currently in progress at Bélé East and Bélé West, drilling of two more exploration targets located on the Sissingué exploitation permit area, namely Papara and Katara, is also planned for the March 2017 quarter. These drilling programmes are aimed at delineating additional Mineral Resources and Reserves that can be economically processed through the Sissingué processing facility in due course.
Project Debt Financing
Perseus has previously announced that the Company intended to fund the development of Sissingué using a mix of US$60 million of project debt finance and US$40 million of internally generated cash and existing cash reserves.
Given the uncertainty associated with the Sissingué Ore Reserve created by the re-estimation of the Sissingué Mineral Resource as described above, Perseus has decided to reduce the level of project debt finance that is sought to finance the construction of Sissingué with the balance of development funding to come from internal sources including cash flow and cash reserves.
Modified construction schedule
To date, the development of Sissingué is currently running in accordance with the master schedule and in line with budget. To the end of November 2016, US$38.8 million had been spent, leaving approximately US$70.8 million of the total budget of US$109.6 million (inclusive of all early works and holding costs) to be spent.
Detailed engineering is largely complete as is the procurement of all long lead items of plant and equipment. The construction team has mobilised to site and works are underway on the pouring of concrete works associated with the plant as well as the installation of underground services. The proportion of development works being managed by Perseus’s in-house construction team is also underway with works on the construction of the airstrip, tailings dam and mine camp well advanced.
To accommodate the planned change in funding mix, Perseus, in conjunction with its major contracting group, Lycopodium, and its in-house construction team has reassessed its engineering, procurement and construction schedule and has implemented a plan to manage project development expenditure to align more closely with the Company’s available funding capacity. As a result of the above, the projected date of production of first gold from Sissingué has been moved back approximately 4 months from October 2017 to the end of February 2018.
CORPORATE
Cash and Bullion
Based on the gold price of US$1,178.10/ounce and an A$:US$ exchange rate of 0.7452 as at 30 November 2016, the total value of available cash and bullion on hand at 30 November 2016 was $84.3 million. This sum is A$52.6 million less than the balance of cash and bullion as at 30 September 2016 and largely reflects heavy capital investment at both Edikan and Sissingué as well as the production shortfall at Edikan during the period.
Debt
At the date of this Market Release, Perseus had no debts other than creditors that are payable in the ordinary course of business.
Gold Price Hedging
At 30 November 2016, gold forward sales contracts were in place for 176,880 ounces of gold at US$1,280 per ounce. This includes 100,000 ounces of hedging at an average price of US$1,307 per ounce that is specifically earmarked to support the proposed debt financing of the Sissingué development.
Competent Person Statement:
Production targets for the EGM referred to in this report are underpinned by estimated Ore Reserves which have been prepared by competent persons in accordance with the requirements of the JORC Code. The Company confirms that all material assumptions underpinning those production targets, or the forecast financial information derived from those production targets, in its market release dated 19 April 2016 and its 2016 Financial Statements released on 29 August 2016 continue to apply and have not materially changed. Refer “Technical Report – Central Ashanti Gold Project, Ghana” dated 30 May 2011. Steffen Brammer and Paul Thompson, each of whom is a Qualified Person as defined in NI 43-101 and an employee of the Company, have approved the inclusion of technical and scientific information in this report.
The information in this report and the attachments that relates to the 2016 SGM and Bélé Mineral Resource estimates is based on information compiled by Lynn Olssen a Competent Person who is a Chartered Professional (Geology) and a Member of the Australasian Institute of Mining and Metallurgy (MAusIMM), and a full time employee of Snowden Mining Industry Consultants Pty Ltd. Ms Olssen has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which she has undertaken to qualify as a Competent Person as defined in the JORC Code 2012 and a Qualified Person as defined in NI43-101.Ms Olssen has no economic, financial or pecuniary interest in the company. Ms Olssen consents to the inclusion in this report of the matters based on her information in the form and context in which it appears and has approved the inclusion of technical and scientific information in this report.
Caution Regarding Forward Looking Information:
This report contains forward-looking information which is based on the assumptions, estimates, analysis and opinions of management made in light of its experience and its perception of trends, current conditions and expected developments, as well as other factors that management of the Company believes to be relevant and reasonable in the circumstances at the date that such statements are made, but which may prove to be incorrect. Assumptions have been made by the Company regarding, among other things: the price of gold, continuing commercial production at the Edikan Gold Mine without any major disruption, development of a mine at Sissingué and/or Yaouré, the receipt of required governmental approvals, the accuracy of capital and operating cost estimates, the ability of the Company to operate in a safe, efficient and effective manner and the ability of the Company to obtain financing as and when required and on reasonable terms. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which may have been used by the Company. Although management believes that the assumptions made by the Company and the expectations represented by such information are reasonable, there can be no assurance that the forward-looking information will prove to be accurate. Forward-looking information involves known and unknown risks, uncertainties, and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any anticipated future results, performance or achievements expressed or implied by such forward-looking information. Such factors include, among others, the actual market price of gold, the actual results of current exploration, the actual results of future exploration, changes in project parameters as plans continue to be evaluated, as well as those factors disclosed in the Company’s publicly filed documents. The Company believes that the assumptions and expectations reflected in the forward-looking information are reasonable. Assumptions have been made regarding, among other things, the Company’s ability to carry on its exploration and development activities, the timely receipt of required approvals, the price of gold, the ability of the Company to operate in a safe, efficient and effective manner and the ability of the Company to obtain financing as and when required and on reasonable terms. Readers should not place undue reliance on forward-looking information. Perseus does not undertake to update any forward-looking information, except in accordance with applicable securities laws.
Managing Director
Jeff Quartermaine
+61 8 6144 1700
[email protected]
Investor Relations
Cathy Moises
+ 61 412196350
[email protected]
Media Relations
Nathan Ryan
+61 4 20 582 887
[email protected]
