Perseus Mining has “outstanding” FY20 with EBITDA up 67% and after-tax profit 12.5 times higher

Perseus Mining Limited (ASX:PRU) (TSE:PRU) (OTCMKTS:PMNXF) has a very strong footing to achieve its goal of 500,000 ounces of annual gold production after returning FY20 financial results described as "outstanding". Highlighting its successful transition to a multi-mine, multi-jurisdictional gold producer, Perseus recorded EBITDA from operations of A$273.8 million in FY20, a 67% increase compared to the previous financial year. This follows an increase in sales revenue of 16% to A$591.2 million and a decrease in cost of sales of 8% to A$317.4 million. Net profit after tax The West African gold producer recorded a net profit after tax of A$94.4 million or 8.1 cents per share, compared to a net profit after tax of A$7.6 million or 0.7 cents per share in the previous financial year. At June 30, 2020, the total value of cash and bullion on hand was A$237.5 million, or A$69.2 million more than at June 30, 2019. CEO and managing director Jess Quartermaine told Proactive that the results were outstanding. He said that it had been a "very good year indicated by the results, particularly against a backdrop where lots of industries are struggling with COVID and things of that nature". In describing the profit after tax, he told Proactive: "This was a somewhat extraordinary 1,146% better than what we achieved in the previous year.” $213 million of cashflow Almost A$213 million of cashflow was generated from gold operations, 46% up on the previous year. “The improved gold price over this period of time had something to do with that result but also our cost base has been gradually coming down following implementation of an updated mining strategy at Edikan in 2019,” Quartermaine said. The materially improved after-tax profit is predominantly due to: A 16% increase in revenue resulting from 16% higher gold prices as well as higher gold sales at Sissingué compared to the prior year; An 8% decrease in cost of sales due to decreased mining costs at Edikan following the implementation of a revised mining strategy involving changing from a two-contractor operation to a single mining contractor operation with effect from January 1, 2019; Depreciation and amortisation expense of A$134.1 million, representing a decrease of 13% during the year due to lower rates of mining at Edikan as required by the revised mining strategy; A write-down and impairment expense of A$4.5 million compared to the prior year of A$0.1 million. The impairment expense related mainly to written off exploration expenditure on the Zanikan and Papara prospects in Côte d’Ivoire and the Dadieso prospect in Ghana; A foreign exchange gain of A$13.8 million, compared to a gain of A$15.5 million in the prior year, mainly due to devaluation of the Australian dollar against the US dollar and revaluation of intercompany loans; A decrease in financing costs to A$4.1 million from A$6 million in the prior year; and An income tax expense of A$32.2 million compared to a A$1.8 million tax benefit in the prior year due to the commencement of payment Ghanaian income tax instalments in the current financial year. “Very healthy position” Quartermaine said: “The financial results released by Perseus are impressive by most measures and indicate that the company is in a very healthy position, continuing to improve in all aspects of the business. “At A$273.8 million, our FY2020 gross profit from operations before depreciation and amortisation continues a recent trend on material improvement relative to the prior year, and after bringing various charges including depreciation and amortisation of A$134.1 million to account, our reported net after-tax earnings were a credible A$94.4 million or 8.1 cents per share, nearly 12.5 times the after-tax profit of A$7.6 million earned in the last financial year. “Our net cash flow from operations increased by 46% or A$66.6 million to A$212.8 million during the year. “With cash and bullion on hand valued at A$237.5 million at the end of the year we are in a net cash positive position of A$19.8 million after outstanding debt of A$217.7 million has been brought to account notwithstanding having spent approximately A$214.9 million on developing the Yaouré Gold Mine, our third gold mine, which is expected to produce first gold in December 2020.” Expected to remain strong The company’s financial performance is expected to remain strong with continuing solid gold production and an improving cost structure at each of its three operating gold mines. The CEO and MD said that Perseus was well on track to continue delivering value to its shareholders and generate benefits for all of its other stakeholders. “With Yaouré coming on stream, from FY2022 Perseus’s production levels should be in the order of 500,000 ounces of gold per year. “With a continued strong gold price, Perseus will be in a position to generate even more material amounts of free cash flow than it has done in FY2020 and record significant profits that will enable the company to continue to grow, manage its balance sheet and potentially start returning cash to shareholders via a future dividend stream.” Given the potential for changes to PRU’s operating environment due to COVID-19, forecasting future gold production or costs with full confidence is challenging. The company said every effort was being applied to maintaining ‘business as usual’ and achieving internal production and cost targets, but success could not be guaranteed while the spread of COVID-19 continued in West Africa.