The Best Use of Capital in a Gold Bull Market (Jeff Quartermaine)

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Right eye buddy borders big
humdigger of a bloody guest for

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this one.
The main man from Perseus live

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from in Darba at the time when
you recorded it was live.

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It was, it was more than live.
It was the day after it became

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apparent that Zijin and Lundin
were collectively, you know,

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putting in a strategic placement
into predictive so.

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And we didn't shy away from
asking him about it either.

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Yeah, good, John.
It was great, he said, right as

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we met him, shook his hand.
Yeah, we're not going to talk

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too much about it, but we
couldn't, I couldn't keep quiet.

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First question straight out the
blocks.

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We had to ask him about it.
And yeah, Jeff is a a real

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gentleman.
We spoke about everything from

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operating in West Africa,
hedging, M&A, how we've used it,

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everything that sort of came to
mind.

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It was awesome to pin him down
in a in a super busy few days

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while we're over there in Cape
Town and we're excited to share

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it with the money miners.
Very, very good.

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Right?
Now let's get into this big

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humdinger of an episode brought
to you by the big humdinger

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Cross.
Try boys, the four pillars of

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bloody excellence.
Tech services, products,

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projects and operations.
Right?

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Originally an underground
specialist, but now they are

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looking at the sunshine.
I'm talking APC builds A50 mil

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or more.
Not just pace plants.

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Any bloody plant.
These guys are gambid and holy

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snap and duck shit.
They're good at building paste

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plants. 50 million more.
I thought it'd be a multiple of

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4 Chucka. 01 Mate Chucka 01 all
supported by the four pillars of

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this sensational engineering
company.

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Now we'll get into Jeff
Quartermaine.

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Don't quite show.
Let's go.

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All right, money manners.
We've got another awesome guest

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here at Indaba, Jeff
Quartermaine, who leads Perseus

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Mining.
Jeff, thanks for making the time

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and coming on the show.
Oh, thank you.

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My pleasure to be here.
Now we've got you at a very

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interesting time.
There's been a few developments

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in in West Africa, a whole bunch
of things we want to talk to you

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about.
But first and foremost, we're

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going to have to put you on the
spot and hear a little bit about

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a company in which you own just
under 20% in what's going on at

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Predictive and what's going to
happen from here.

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Well, that's a very good
question.

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Well, as you, as you're aware,
they have made a placement of

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shares to the Lundin Group and
also Zijin moved down on the

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register and we'll see where
things go from here.

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But at this stage of the game,
it's fairly early on in the

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piece and we need to consider
what it means and we'll make

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appropriate moves from here.
When when you acquire the 20%

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stake in predictive the the
vendors from memory, the the the

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share sale agreement included a
a call option whereby

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effectively if you if you lobbed
a change of control before the

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31st of December 2025, those
vendors would get 100% of the

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uplift in any in in in any
event, so.

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No, I think actually they get
50% percent, OK.

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We share the upside.
Share the upside.

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Gotcha gotcha.
So so you you would have

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incentive to play the long game.
Well, yes, you're quite right.

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Theoretically that's true.
But to be frank, if we felt it

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was worthwhile going forward
now, we would go forward.

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And you know, that would
certainly not be our prime

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motivation, let me say that.
It was, it was a really

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interesting comment you made in
the the quarterly call.

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Just go on where.
Yeah, it was, it was, it was

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great.
You kind of you pointed, you

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pointed to the valuations that
you know some, some research

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analysts were putting on
undeveloped projects and and

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there was words to the effect of
some people's job are clearly to

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promote a story not to not to
properly value a company.

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So do you.
Are you of the opinion broadly

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that valuations are pretty rich
amongst the undeveloped?

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Oh, I think it's fair to say
that.

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I mean, and it's not a criticism
per SE of of people because we

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have a different, you know, our
business is different.

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Our business is about creating
value, monetizing natural

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resources.
Now you know what that means, of

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course, is that we need to
invest the capital to develop

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and then extract the money.
What what gets overlooked quite

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regularly in the analysis that
are presented, people put DFS

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out, which is 100% of the
project.

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Well, in Africa in particular,
many governments have, you know,

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interests in the project, like
have a carried interests of 15

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or 20%.
So that means that you're not

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entitled to 100% of the cash
flow.

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You're entitled to maybe 85 in
the case of say, say, beginning

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on top of that, depending on how
you finance the project, if you,

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once you've recovered your, you
know, your debt financing the

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company debt, you start, you
distribute money by dividends.

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Now dividends attract a 15%
withholding tax.

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So for someone like us, we would
be getting 85% less, you know,

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the, the less 15% of 15%
basically, which is the

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withholding tax on the, on the,
on the government side of

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things.
So, so you know, The thing is

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that there's a lot of leakage
between the project and your

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bank balance and, and, and our
success in investment is, is

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measured by the return on the
funds employed in the project,

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including the acquisition costs.
So our equation is very

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different to the equation that
other people have when they're

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looking at these projects.
They're going to say, look, I

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don't, I'm not critical of them.
They have a have a valid role,

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but it's not correct to compare
the two things.

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How has the the run up in gold
over the past couple years,

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specifically when it's when it's
gone really hot, The 2024

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changed the the approach of
yourself and Perseus toward M&A.

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How's the thinking kind of
changed?

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Oh, well, look, you know it's
quite interesting when you look

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at our company very early on in
the we started off as a one mine

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company in one country exposure
and I realized very early that

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that was a very dangerous, very
risky way to live your life.

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So we decided that we should
seek to diversify countries and

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also projects.
Now having done that, you know,

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the question was well when how
do you do the timing of the

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investment at that stage of the
game?

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We're almost at the bottom of
the cycle and many people said

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you're mad, you shouldn't invest
at all, you should be protecting

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your capital base.
I took a contrary view to say

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no, we should be investing now
because we want to be producing

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gold and selling when the cycle
turns and not building when the

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cycle turns because the cost of
building is so much higher.

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And we did that.
We built at the bottom of the

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cycle.
So we're starting to produce

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gold.
If you look at one of my

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favourite charts which result in
all of our presentations, it

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shows the production profile
steadily rising over the last,

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you know, eight years or so.
It shows the operating costs,

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the all insight costs reasonably
flat, but the gold price is

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rising and the margins
increasing.

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You know, what better time to be
increasing your production when

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the gold price is rising.
You're maximizing your cash

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generation and that's largely
what Percy's has done and that's

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why we have 704 million U.S.
dollars in the bank at the end

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of the year.
Your, your point on, on the,

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the, the leakage that you know
happens with, with M&AI,

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probably hadn't thought about
that in the context of, you

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know, the, the options you had.
We've often commented about

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your, your M&A ambitions, which
which have been, you know, well

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executed and you've created so
much value through the

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development of, of assets that
you've acquired over time.

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But in the in recent history,
we've, we've always said, why

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aren't you just buying back your
own stock?

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Well, we are buying back and.
You are you.

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You did.
You did subsequently announce a

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maiden buyback of up to 100.
Million, well, this year it's

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100 million and, and, and the
reason it's not larger, yeah, at

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the moment is that I've never
done a buyback before.

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And I have to say I was a bit
skeptical about the real value

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of it.
But the last six months and I

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have to say we can't trade all
the time because we're

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frequently in blackouts, but has
really changed my opinion.

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We've been able to use that that
buyback mechanism as a sort of a

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strategic tool to keep out a bit
of balance in the stock,

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particularly over the holiday
period where volumes were very

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light and there was quite a bit
of volatility coming out of the

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United States.
So, you know, unchecked a little

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bit of bad news out of the US
would push the ASX 200 down and

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push our stock right down to
start off and then you'd be

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recovering from the hole.
So we were able to step into the

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market under certain
circumstances and hold our stock

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at a reasonable level.
We, we don't stand in front of

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trains, I might say.
I mean, if it's, if there's a

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huge sell off, it happens.
Similarly, we're not chasing

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the, the market either.
If, if investors are buying, we

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let it go.
But it's a very valuable tool to

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be able to take the volatility
out so that shareholders have a

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little bit of certainty about
what their sulk is worth.

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And, and the other thing that of
course does is it gives you a, a

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better base for when you bring
out very good news like we did

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with the quarterly report and
our financials to come because

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you're leveraging off a higher
base in terms of the, the, the,

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the future, future share price.
When, when we look sort of like

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broadly at the, you know, gold
miners historically, there's

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this real tendency to, to not be
able to, you know, expand margin

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even when gold price goes up or
maybe there's a window when it

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happens.
But then it kind of, you know,

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it's kind of given back like
like what what is actually key

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to to managing costs as a gold
miner?

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How do you actually have margin
expansion?

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Well, well managing costs, I
mean you've just got to work day

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in day out basically and keep
looking for ways to improve your

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efficiency and, and your
business.

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So, you know, whether it's a a
technological change like we

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have have recently, you know,
use different software for

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designing blast, which has been
very good for us, is this, you

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know, less solution, things like
that or whether, you know, you

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do other things.
One of the most important things

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that we did was we, you know, we
worked extremely hard at, we've

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always worked very hard at, you
know, cultivating our workforce

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and genuinely creating a team,
creating an environment where

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people want to work.
And I can tell you what in makes

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an enormous amount of
difference.

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Certainly in Ghana, you know,
it's very evident.

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We're, we're producing it around
$1000 an ounce and our team are

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immensely proud of what they're
doing and we encourage that.

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So there's all sorts of ways to,
you know, to, to become a Better

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Business if you look hard
enough.

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And investing in the assets,
does that come more to the fore

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as prices rise, it becomes more
of a seller's market.

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So you don't want to sell any of
your assets, but buying is kind

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of off the table in a sense.
Do you just think a lot about

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changing your, your MO in going
out and buying or does the the

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attraction to actually investing
in the assets that you've got,

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lifting the answers there,
improving the margin become the

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the core?
Focus well, look, we we have

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very specific, you know,
financial targets, returns on

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investment and things of that,
that nature and we're quite

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disciplined.
We won't chase a situation just

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because I mean, at the moment
for instance, you're right, I

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mean the prices out in the
market are pretty high because

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people are opportunistically
using very high gold prices on a

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long term basis.
Now they may be right, I don't

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know.
But historically speaking it's

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it's it looks ambitious.
You know, the for us what we do

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is we look closer to home.
The best development

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opportunities we have are
adjacent to our infrastructure

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that's already been paid for and
is operating and de risked.

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So we're looking around all of
our properties to see or what

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opportunities do we have here.
Now you, you might have seen

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that we recently announced the
decision to go underground at

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the Aori pit, at the Aori mine
off one of the pits.

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Now you know, the beautiful
thing about that particular

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exercise is we have a mill
already built, paid for and

224
00:11:46,640 --> 00:11:50,080
operating extremely well.
So you know, the cost to us is

225
00:11:50,360 --> 00:11:52,440
the, the, the, some, some
infrastructure, but the

226
00:11:52,440 --> 00:11:55,760
development to get down there.
So that's the most productive

227
00:11:55,760 --> 00:11:58,800
bounces you can possibly have.
And of course, if we if we look

228
00:11:58,800 --> 00:12:02,960
across our operations, some of
those pits that we've since shut

229
00:12:03,200 --> 00:12:06,120
were designed at like an 1100 or
$1200 pit shop.

230
00:12:06,640 --> 00:12:11,400
So the question is, well, should
we go back and use a higher gold

231
00:12:11,400 --> 00:12:14,360
price to design those pits and
maybe do another cutback?

232
00:12:15,200 --> 00:12:17,800
That's tempting in the sense
that you get more answers, but

233
00:12:18,000 --> 00:12:20,600
you have to recognise it's going
to increase your cost space as

234
00:12:20,600 --> 00:12:23,560
well because the incremental
allowance comes out at a higher

235
00:12:23,560 --> 00:12:26,240
cost.
And so we as a company need to

236
00:12:26,240 --> 00:12:29,360
look at these sorts of things
and say, you know what is

237
00:12:29,360 --> 00:12:32,000
important here to us is it
answers, is it cost?

238
00:12:32,160 --> 00:12:35,800
Is it cash flow and make
determinations based on the on

239
00:12:35,800 --> 00:12:40,480
the facts as they present.
If I look across West Africa and

240
00:12:40,480 --> 00:12:44,760
to Central Africa and across the
continent, the Kenafaso, Mali,

241
00:12:44,760 --> 00:12:50,360
Sudan, Niger, there's been a lot
of, you know, political events

242
00:12:50,360 --> 00:12:53,440
that haven't been necessarily
for the the positive of the, the

243
00:12:53,440 --> 00:12:56,560
country.
How has your decade plus of

244
00:12:56,800 --> 00:13:00,520
experience in that part of the
world shaped your thinking and

245
00:13:00,920 --> 00:13:03,800
how do you view some of these
specific jurisdictions going

246
00:13:03,800 --> 00:13:05,360
forward?
Oh, well, look, some of them are

247
00:13:05,360 --> 00:13:08,280
going through poor Times Now,
but that some are going well, I

248
00:13:08,280 --> 00:13:09,880
mean, I, you know, tell the
story.

249
00:13:09,880 --> 00:13:13,440
The first time I went to Cote
d'Ivoire was shortly after the

250
00:13:13,440 --> 00:13:17,520
end of the Civil War in 2011.
I mean, it was a fairly scary

251
00:13:17,520 --> 00:13:19,400
place.
You go there today, it's a

252
00:13:19,400 --> 00:13:23,400
wonderful country and very
prosperous and lots of activity

253
00:13:23,400 --> 00:13:25,360
going on.
So countries ebb and flow.

254
00:13:25,360 --> 00:13:28,720
And this is, this underpins the
enormous importance of the

255
00:13:29,200 --> 00:13:30,840
portfolio approach that we've
taken.

256
00:13:30,840 --> 00:13:34,000
Have multiple assets, multiple
jurisdictions work on the

257
00:13:34,000 --> 00:13:37,280
principle that at any given
time, 1 country may be

258
00:13:37,280 --> 00:13:40,520
struggling whereas another one's
going well, another one's fairly

259
00:13:40,520 --> 00:13:42,520
ordinary or whatever.
You know, like just balance it

260
00:13:42,520 --> 00:13:45,720
out, take the volatility out of
your earnings because if you

261
00:13:45,720 --> 00:13:49,040
think that every country is
going to be fantastic all of the

262
00:13:49,040 --> 00:13:52,680
time, you're ignoring history.
You know, they have five year

263
00:13:52,680 --> 00:13:56,000
political cycles, Countries come
and go, governments come and go.

264
00:13:56,480 --> 00:14:00,520
So I think having a portfolio
pre approach, you know, balanced

265
00:14:01,080 --> 00:14:04,040
is really, really important in
taking this, taking this thing

266
00:14:04,040 --> 00:14:05,280
out of it.
You know, there are some

267
00:14:05,280 --> 00:14:08,800
countries that we wouldn't be
going to today purely on a

268
00:14:08,800 --> 00:14:12,520
security basis.
But you know, once again, it's

269
00:14:12,520 --> 00:14:15,520
very easy to make that judgement
from afar.

270
00:14:15,960 --> 00:14:18,560
Quite often the reality on the
ground is very different.

271
00:14:18,960 --> 00:14:21,760
And I'll give you a case in
point of Sedan where we do have

272
00:14:21,760 --> 00:14:24,520
a property.
You know, we're up, right up in

273
00:14:24,520 --> 00:14:27,240
the north of the country near
the border with Egypt and have

274
00:14:27,240 --> 00:14:31,240
seen no disturbance anywhere
remotely close to our operation.

275
00:14:31,800 --> 00:14:33,760
And you might say, well, if
that's the case, why aren't you

276
00:14:33,760 --> 00:14:36,040
developing it?
Well, you know, there are some

277
00:14:36,080 --> 00:14:38,600
some challenges in terms of
getting through the ports and

278
00:14:38,960 --> 00:14:41,400
things like that and being
absolutely sure that you're

279
00:14:41,400 --> 00:14:43,800
going to have equipment when you
need it that make it

280
00:14:43,800 --> 00:14:46,160
challenging.
But but from a safety point of

281
00:14:46,160 --> 00:14:50,600
view, our people are on on the
site are safe, but you know, you

282
00:14:50,600 --> 00:14:52,800
don't want to push your luck I
guess is what I would say under

283
00:14:52,800 --> 00:14:55,800
those circumstances.
You've, you've done well and

284
00:14:55,800 --> 00:14:58,960
Perseus in the, in the history
of the company has sort of

285
00:14:58,960 --> 00:15:02,280
surfed the waves of countries
coming into a bit of a purple

286
00:15:02,280 --> 00:15:03,840
patch and it's, and it's done
quite well.

287
00:15:03,840 --> 00:15:07,120
And, you know, let's, let's hope
Tanzania stays the course and

288
00:15:07,120 --> 00:15:08,880
keeps going in the trajectory
it's going.

289
00:15:09,320 --> 00:15:12,080
So Dan, like you mentioned,
there was a, you know, a bit of

290
00:15:12,160 --> 00:15:13,520
trouble over the past year or
so.

291
00:15:13,520 --> 00:15:15,480
We'll see how that kind of
eventuates.

292
00:15:15,480 --> 00:15:20,680
But is this a really deliberate
part of the the strategy to, you

293
00:15:20,680 --> 00:15:23,480
know, catch that kind of wave or
is it just where the

294
00:15:23,480 --> 00:15:25,720
opportunities have?
Proceeded No, it's deliberate,

295
00:15:25,720 --> 00:15:27,360
all right?
I mean, we don't go to places

296
00:15:27,360 --> 00:15:31,640
unless we are convinced that,
you know, there is a better

297
00:15:31,640 --> 00:15:33,520
future ahead.
Now, you know, you might say,

298
00:15:33,520 --> 00:15:35,280
well, Gee, you got it wrong in
Sudan, didn't you?

299
00:15:35,400 --> 00:15:38,200
And indeed we did.
But it was on an upward

300
00:15:38,200 --> 00:15:40,520
trajectory.
We did a lot of research into

301
00:15:40,520 --> 00:15:43,680
the situation, and we were all
convinced that that sedan had

302
00:15:43,680 --> 00:15:45,360
turned the corner and was coming
out.

303
00:15:45,600 --> 00:15:48,640
And it was until it wasn't.
Now, what happens into the

304
00:15:48,640 --> 00:15:52,120
future remains to be seen.
But, you know, by and large, we,

305
00:15:52,160 --> 00:15:53,400
you know, we do take a good
look.

306
00:15:53,400 --> 00:15:57,440
We do our homework.
We do our due diligence and, you

307
00:15:57,440 --> 00:16:00,080
know, form a judgement.
Now we do, you know, take advice

308
00:16:00,080 --> 00:16:02,400
for a lot of people on some of
these things.

309
00:16:02,400 --> 00:16:05,400
But yeah, you know, you got to,
you got to have a good look.

310
00:16:06,520 --> 00:16:10,920
In the case of Tanzania, there's
still some, you know, final

311
00:16:10,920 --> 00:16:14,480
wrinkles to iron out in terms of
a a few clauses, the agreement

312
00:16:14,480 --> 00:16:18,040
with the government how how
absolutely like necessary is the

313
00:16:18,440 --> 00:16:20,880
the long term certainty of the
dynamics of the government

314
00:16:20,880 --> 00:16:24,320
before FID.
Oh, look, we, we as a company,

315
00:16:24,320 --> 00:16:26,840
we say it's essential we have to
sort these things out.

316
00:16:26,840 --> 00:16:29,320
And the reason I say that is
that, you know, if you, if you

317
00:16:29,400 --> 00:16:34,000
look at over time, the
philosophy around investment has

318
00:16:34,000 --> 00:16:37,040
changed.
So if you go back 2530 years,

319
00:16:37,040 --> 00:16:40,360
you know, companies came into
countries and, you know,

320
00:16:40,360 --> 00:16:43,520
invested, took everything out
basically and left little behind

321
00:16:43,880 --> 00:16:46,720
that that sentiment is
completely changed now.

322
00:16:46,960 --> 00:16:50,560
And you can see in countries
like Mali, for instance, where

323
00:16:50,840 --> 00:16:52,760
the government is sort of
saying, well, hang on a minute,

324
00:16:52,760 --> 00:16:54,080
where's our share?
Now?

325
00:16:54,080 --> 00:16:58,280
What the companies have done in
the past is not bad or wrong,

326
00:16:58,280 --> 00:17:01,920
but it's, it's got a different
interpretation of the law that

327
00:17:01,920 --> 00:17:03,920
today.
So my view and, and I had a

328
00:17:03,920 --> 00:17:07,119
meeting yesterday with the
deputy minister for mining here

329
00:17:07,359 --> 00:17:10,119
in for Tanzania.
And I said to him, look, we're

330
00:17:10,119 --> 00:17:13,079
going to be your partner for the
next 20 years.

331
00:17:13,599 --> 00:17:16,240
And during that time, there's
going to be periods where we

332
00:17:16,240 --> 00:17:19,599
have differences of opinion.
But let's start off agreeing on,

333
00:17:19,599 --> 00:17:22,720
on what the rules are.
Let's iron out the bugs now and

334
00:17:22,720 --> 00:17:25,920
then we can go forward and then
we can deal with any differences

335
00:17:25,920 --> 00:17:28,840
that arise over time.
And I think it's just prudent to

336
00:17:28,840 --> 00:17:30,360
do that.
And it's, it's in our

337
00:17:30,360 --> 00:17:33,720
shareholders interests that we,
you know, eliminate as much risk

338
00:17:33,720 --> 00:17:37,400
as we can possibly do before we
get going and starting to commit

339
00:17:37,400 --> 00:17:40,640
serious money to the country.
But we're very optimistic about

340
00:17:41,000 --> 00:17:43,120
getting that underway.
I might say everything's looking

341
00:17:43,120 --> 00:17:48,120
extremely good.
Just want to ask you about the

342
00:17:48,120 --> 00:17:50,600
the actions of some of your
peers, specifically Emerald

343
00:17:50,600 --> 00:17:53,400
comes to mind.
They operate in Southeast Asia

344
00:17:53,680 --> 00:17:57,240
and they've made a pretty
deliberate choice to come come

345
00:17:57,240 --> 00:18:00,080
back home, as it were, to where
the headquarters is in Australia

346
00:18:00,080 --> 00:18:04,880
and buy an asset in WA.
Thinking about multiples that

347
00:18:04,880 --> 00:18:07,440
they trade on and trying to see
a bit of an uplift.

348
00:18:08,040 --> 00:18:11,200
Mind you, they're trading quite
competitively by by all accounts

349
00:18:11,200 --> 00:18:13,120
anyway.
But is that something that's

350
00:18:13,120 --> 00:18:16,360
sort of crossed the mind, or was
Africa the.

351
00:18:16,800 --> 00:18:18,040
Yeah.
Look, we have, we have

352
00:18:18,040 --> 00:18:21,000
considered that from time to
time there are different views.

353
00:18:21,000 --> 00:18:25,440
I mean either your African
assets are going to be re rated

354
00:18:25,440 --> 00:18:29,400
up or your Australian assets are
going to be de rated down, you

355
00:18:29,400 --> 00:18:31,320
know, whichever.
I don't know how that works

356
00:18:31,320 --> 00:18:33,240
actually, but that is the
possibility.

357
00:18:33,560 --> 00:18:36,920
But the reason why we're not
rushing to come to Australia is

358
00:18:36,920 --> 00:18:40,120
that we believe that over the
last, you know, 1415 years we

359
00:18:40,120 --> 00:18:43,680
have developed a fairly large
amount of intellectual capital

360
00:18:43,680 --> 00:18:46,320
on operating on the African
continent.

361
00:18:46,720 --> 00:18:50,320
That gives us something of a
competitive advantage over over

362
00:18:50,320 --> 00:18:51,840
other folk.
Now, if we were to come back to

363
00:18:51,840 --> 00:18:55,360
Australia, I'm an Australian for
sure, but you know, having

364
00:18:55,360 --> 00:18:59,120
operated in the, you know, the,
the, the Hurley belly of WA is

365
00:18:59,120 --> 00:19:00,840
not something that I'm overly
familiar with.

366
00:19:00,840 --> 00:19:04,040
And we would be starting at the
bottom of the curve and have to

367
00:19:04,040 --> 00:19:06,360
build up that, that, that
intellectual property again.

368
00:19:06,600 --> 00:19:10,520
So we think that by utilizing,
we've already invested a lot of

369
00:19:10,520 --> 00:19:12,120
money in learning the things we
know.

370
00:19:12,480 --> 00:19:15,560
So we might as well leverage
that knowledge and, and use it

371
00:19:15,560 --> 00:19:18,480
in a, on a, in the place where
the projects themselves are

372
00:19:18,480 --> 00:19:21,160
fabulous.
And by and large, operating here

373
00:19:21,160 --> 00:19:24,960
is extremely good, as is is is
evident by the results that

374
00:19:24,960 --> 00:19:26,560
we've produced over the last
eight years.

375
00:19:26,840 --> 00:19:30,280
You know, it's pretty hard to
argue with the scoreboard, and

376
00:19:30,280 --> 00:19:31,760
our scoreboard's looking pretty
good.

377
00:19:31,840 --> 00:19:34,960
You wouldn't have been able to,
to build Perseus in N.W.A

378
00:19:35,160 --> 00:19:36,920
either.
You know, it's like that the,

379
00:19:37,160 --> 00:19:41,800
the opportunities to, to, to
develop assets were marginal

380
00:19:41,800 --> 00:19:44,000
relative to where you've got
like low cost mines.

381
00:19:45,120 --> 00:19:48,600
Yeah, which which yeah, I'd, I'd
prefer.

382
00:19:48,720 --> 00:19:50,600
I'd prefer a lower cost
operation than one that has to

383
00:19:50,600 --> 00:19:53,160
turn off for half the cycle.
Well, you know, it's an

384
00:19:53,160 --> 00:19:55,680
interesting thing and this
sounds like a cheap shot and I I

385
00:19:55,680 --> 00:19:58,640
don't mean it to be that, I just
want to illustrate the point.

386
00:19:58,640 --> 00:20:01,560
But you know, we're all aware of
our friends at Regis and the

387
00:20:01,560 --> 00:20:05,280
fact that their project got
turned off after 10 years of

388
00:20:05,280 --> 00:20:09,160
working very hard at getting,
you know, Mcfilimy's licensed.

389
00:20:09,680 --> 00:20:12,320
Now in that 10 year period, Well
actually in the probably truth

390
00:20:12,320 --> 00:20:16,440
be known as probably 12 year
period, Perseus has licensed and

391
00:20:16,440 --> 00:20:19,720
built three months in the same
10 year period that.

392
00:20:20,160 --> 00:20:22,200
The Regis was struggling to get
one up and going.

393
00:20:22,480 --> 00:20:27,200
Now that sort of says that, you
know that, that people criticize

394
00:20:27,200 --> 00:20:30,520
Africa and say it's hard and all
the rest of it, but you can get

395
00:20:30,520 --> 00:20:33,440
things done if you go there with
the right attitude and the, and

396
00:20:33,440 --> 00:20:35,440
the right attitude is extremely
important.

397
00:20:35,840 --> 00:20:38,920
You go there with capital behind
you and, and know how you can do

398
00:20:38,920 --> 00:20:42,040
extremely well.
The right attitude is super

399
00:20:42,040 --> 00:20:45,040
important.
You must, I believe, go there

400
00:20:45,040 --> 00:20:47,840
with the mindset of saying,
look, we're going to generate

401
00:20:47,840 --> 00:20:50,880
significant benefits from this,
which we are going to share with

402
00:20:50,920 --> 00:20:53,960
all stakeholders.
So you have to recognize that

403
00:20:54,440 --> 00:20:57,240
the host government, the host
community, your employees all

404
00:20:57,240 --> 00:21:00,600
have to get something out of
their efforts because after all

405
00:21:00,600 --> 00:21:03,680
you, we're bringing capital and
intellectual property to the

406
00:21:03,680 --> 00:21:06,800
table, know how how to extract
value from resources.

407
00:21:06,800 --> 00:21:09,200
But those resources belong to
those countries and those

408
00:21:09,200 --> 00:21:11,680
people, and they do need to get
rewarded for that.

409
00:21:12,240 --> 00:21:14,840
Surely some swick underground
diamond drill and expertise

410
00:21:14,840 --> 00:21:17,360
might come in handy for Perseus?
I think you're under something.

411
00:21:17,480 --> 00:21:21,200
Correct back with 17,000,000
Exploration Drill meters

412
00:21:21,200 --> 00:21:25,680
underground mate and to to go
beyond the short holes, the deep

413
00:21:25,680 --> 00:21:29,600
X division going down to 2000
meters and part of the Parenti

414
00:21:29,600 --> 00:21:32,120
group mate.
This is excellence unhearthed.

415
00:21:32,560 --> 00:21:35,360
This is bloody unbelievable and
that mate that excellence is

416
00:21:35,360 --> 00:21:38,520
being passed down everyday.
Blue chip operators, Matey.

417
00:21:38,600 --> 00:21:42,080
On to the next generation of
SWEC operators.

418
00:21:42,360 --> 00:21:44,680
So it might be a perfect fit
over there.

419
00:21:45,400 --> 00:21:47,560
I think, I think you're on to
something just on the theme of

420
00:21:47,560 --> 00:21:49,520
sort of cheap shops.
Maybe you can have another one

421
00:21:49,520 --> 00:21:51,840
here at another.
I said it wasn't a cheap shop.

422
00:21:53,160 --> 00:21:58,080
And another competitor maybe,
but you guys to an extent

423
00:21:58,240 --> 00:22:01,240
distinguish yourself by
reporting an all insight cost as

424
00:22:01,240 --> 00:22:02,760
opposed to an all in sustaining
cost.

425
00:22:03,280 --> 00:22:07,160
We've spoken in the past about
corporate only all in costs and

426
00:22:07,200 --> 00:22:10,920
the broader theme of how gold
miners and miners talk about

427
00:22:11,360 --> 00:22:14,280
their costs.
Tying in with that, some

428
00:22:14,280 --> 00:22:18,600
companies look at copper assets
to to pull down that all in

429
00:22:18,600 --> 00:22:23,960
sustaining cost.
Have you thought seriously

430
00:22:23,960 --> 00:22:27,760
about, you know, tweaks to the
the gold only focus?

431
00:22:27,760 --> 00:22:31,360
Or has it always been gold only
for passes?

432
00:22:31,360 --> 00:22:33,800
Well, well, it's, it's, it's
pretty much gold only.

433
00:22:33,800 --> 00:22:36,760
But I mean, we have said that if
we found a deposit that was

434
00:22:36,760 --> 00:22:40,360
polymetallic, for instance, had
byproducts, then we wouldn't say

435
00:22:40,360 --> 00:22:43,960
no because they had byproducts.
But we certainly wouldn't invest

436
00:22:43,960 --> 00:22:47,840
in the project to get credits,
You know, that that's not quite

437
00:22:48,200 --> 00:22:50,920
what we do.
So, you know, yes, if they came

438
00:22:50,920 --> 00:22:52,440
along, you'd always take them
every day.

439
00:22:52,440 --> 00:22:55,920
But but that's yeah, couldn't
that, that's not our driver.

440
00:22:57,720 --> 00:23:03,640
Portfolio rationalization, Jeff,
you've held onto your minds.

441
00:23:04,760 --> 00:23:07,680
Are you going to are you going
to sell the the what the you

442
00:23:07,680 --> 00:23:11,840
know, as mine life kind of gets
gets more like lesser and

443
00:23:11,840 --> 00:23:12,640
lesser?
Are you going to look to

444
00:23:12,640 --> 00:23:15,080
rationalize while they're still?
I think you've got to look at

445
00:23:15,080 --> 00:23:17,680
the portfolio and make sure that
it's, it's appropriate.

446
00:23:17,680 --> 00:23:22,480
I mean, and I, you know, we may
or may not do that, but, but you

447
00:23:22,480 --> 00:23:26,600
know, you certainly there are
times when an asset is more

448
00:23:26,600 --> 00:23:28,520
valuable to another party than
to yourself.

449
00:23:28,960 --> 00:23:33,040
And, you know, if that situation
was to arise and we could, could

450
00:23:33,040 --> 00:23:35,480
do that and, and earn some money
and redeploy it more

451
00:23:35,480 --> 00:23:38,760
effectively, then, you know,
you'd be crazy not to do that.

452
00:23:39,520 --> 00:23:41,960
But so we, you know, as part of
our strategic thinking, we think

453
00:23:41,960 --> 00:23:45,280
about those sorts of things.
And, and you know, there may be

454
00:23:45,280 --> 00:23:47,840
times in the future when we look
at at doing that the exact

455
00:23:47,840 --> 00:23:50,240
thing.
But I think before you do that,

456
00:23:50,480 --> 00:23:53,680
you need to have a line of sight
to alternative production

457
00:23:53,680 --> 00:23:55,880
sources.
So like for now in our case,

458
00:23:56,200 --> 00:23:59,440
Leonzaga would need to be, you
know, pretty well locked in and

459
00:23:59,440 --> 00:24:03,120
possibly another asset as well
before you started to look at

460
00:24:03,120 --> 00:24:07,080
reducing your production and
cash profiles by divesting.

461
00:24:09,440 --> 00:24:12,080
You've got roughly 1/4 of your
production over the next couple

462
00:24:12,080 --> 00:24:15,560
of years hedged out and hedging
is a interesting talking point

463
00:24:15,560 --> 00:24:18,320
at at the moment in this rising
gold price environment.

464
00:24:18,320 --> 00:24:22,120
Do you just look at that as
security for for the business or

465
00:24:22,640 --> 00:24:27,800
will there come a time where you
are hedged, you know, hedgeless?

466
00:24:28,880 --> 00:24:30,280
Hedgeless, hedge free, Unhedged.
Unhedged.

467
00:24:30,280 --> 00:24:32,560
Basically.
Leverage the.

468
00:24:33,600 --> 00:24:35,320
Gold price.
Well, look, you know, this is,

469
00:24:35,320 --> 00:24:37,440
this is an interesting subject
and I can assure you for the

470
00:24:37,440 --> 00:24:40,720
last 14 years or something that
I've been with Perseus, it's

471
00:24:40,720 --> 00:24:43,680
been a, a hot debate with a lot
of investors along the way.

472
00:24:43,960 --> 00:24:45,280
And my response has never
changed.

473
00:24:45,280 --> 00:24:47,880
So I say, look, you know, I'm a
professional manager.

474
00:24:48,280 --> 00:24:51,240
Price risk is arguably a biggest
risk in the business.

475
00:24:51,240 --> 00:24:54,520
So, you know, I really do need
to do something to protect us

476
00:24:54,520 --> 00:24:58,720
against a, a, a bad situation.
Now I've, you know, been in

477
00:24:58,720 --> 00:25:00,400
circumstance.
Well, you know, I've worked in

478
00:25:00,400 --> 00:25:03,520
the gold industry when the gold
price was $200.00 an ounce, for

479
00:25:03,520 --> 00:25:05,720
instance.
And even in, in Perseus early

480
00:25:05,720 --> 00:25:11,040
years in 2013 when the Eddy Can
mine was not performing to, to

481
00:25:11,240 --> 00:25:13,560
to standard.
The thing that kept us afloat

482
00:25:13,560 --> 00:25:18,240
was we had I think 100 and 100
and odd 1000 ounces of gold

483
00:25:18,240 --> 00:25:22,320
hedged $1800 an ounce and the
spot price went down to 1000.

484
00:25:22,600 --> 00:25:26,760
So that that kept us in business
when without that hedge, we

485
00:25:26,760 --> 00:25:28,680
arguably would have been
struggling at that at that

486
00:25:28,680 --> 00:25:30,920
particular time.
So I think, I think there's a

487
00:25:30,920 --> 00:25:34,680
time and a place for hedging.
I think you need to be, you

488
00:25:34,680 --> 00:25:39,800
know, circumspect around it.
We do do that 2425%.

489
00:25:40,520 --> 00:25:41,880
You've got to be very
disciplined.

490
00:25:42,320 --> 00:25:45,600
For instance, what we do is we,
whenever we sell gold, we always

491
00:25:45,600 --> 00:25:48,680
sell into the lowest priced
hedge book hedges that we have

492
00:25:48,680 --> 00:25:51,320
in the book.
And if the opportunity is there,

493
00:25:51,560 --> 00:25:55,200
we, we, we replace it with high
price hedges because what we

494
00:25:55,200 --> 00:25:59,120
don't want to do is create this
massive contingent liability on

495
00:25:59,120 --> 00:26:00,960
the balance or actually off the
balance sheet.

496
00:26:00,960 --> 00:26:03,920
But there and you've seen time
and time again over the years.

497
00:26:03,920 --> 00:26:07,880
Another cheap shot it appear.
No cheap, no cheap shots, but

498
00:26:08,200 --> 00:26:12,000
no, but you know you there are
there are certain you know, you

499
00:26:12,000 --> 00:26:15,480
can point to examples where some
large companies have gone up.

500
00:26:15,480 --> 00:26:18,480
We got to buy a hedge book back,
you know, and spend an awful lot

501
00:26:18,480 --> 00:26:20,360
of money doing it.
Don't need to see the gold price

502
00:26:20,360 --> 00:26:22,880
move in the opposite direction
shortly thereafter.

503
00:26:22,880 --> 00:26:26,760
So I think provided you have a,
a logical, you know, strategic

504
00:26:26,760 --> 00:26:29,360
rationale for what you're doing,
provided you're disciplined

505
00:26:29,360 --> 00:26:32,320
about how you go about it and
you don't do crazy stuff.

506
00:26:32,320 --> 00:26:37,000
We don't do any fancy
instruments that you know, are

507
00:26:37,000 --> 00:26:39,960
off, you know, are difficult.
I take the view of if I can't

508
00:26:40,240 --> 00:26:43,760
explain this to my, the what
we're doing in words of one

509
00:26:43,760 --> 00:26:45,880
syllable to my board, we don't
do it.

510
00:26:47,320 --> 00:26:50,400
It's as simple as that.
So when you know salesman come

511
00:26:50,400 --> 00:26:54,440
in and want to describe the
latest exotic product, we we

512
00:26:54,480 --> 00:26:56,920
don't go down that path.
Keep it simple.

513
00:26:57,200 --> 00:26:58,840
I like it.
How about just on the on the

514
00:26:58,840 --> 00:27:02,840
cost sides you, you obviously
the the costs in the control of

515
00:27:02,840 --> 00:27:06,680
the miner, not the the sales
price and you have historically

516
00:27:06,680 --> 00:27:09,680
done done quite well at seeing
the margin improve and doing

517
00:27:09,680 --> 00:27:12,760
well.
Do you, do you look at hedging

518
00:27:13,000 --> 00:27:15,480
diesel and they they sort of.
We haven't looked at it over the

519
00:27:15,480 --> 00:27:21,240
years, but but in, in West
Africa in particular the, the

520
00:27:21,240 --> 00:27:23,840
diesel price, it's not a, it's
not a clean hedge with the

521
00:27:24,880 --> 00:27:27,760
correlation to the oil price.
There are, there are various

522
00:27:27,760 --> 00:27:30,440
subsidies and things like that
that come in.

523
00:27:30,440 --> 00:27:33,560
So it's not, you can do it in
principle, but it's not a, it's

524
00:27:33,560 --> 00:27:37,240
not a straight match.
So you're taking some basis risk

525
00:27:37,680 --> 00:27:39,360
in any event.
But we have looked at it from

526
00:27:39,360 --> 00:27:43,480
time to time.
Where are the best discoveries?

527
00:27:46,120 --> 00:27:48,000
The best discoveries are in the
ground, my friend.

528
00:27:49,720 --> 00:27:51,880
I've got no idea.
I mean, honestly, I mean, well,

529
00:27:51,880 --> 00:27:54,600
actually we, we really do like
the Nubian Shield where, you

530
00:27:54,600 --> 00:27:57,680
know, in Sudan.
We think that that is, you know,

531
00:27:57,680 --> 00:28:01,640
one of the most prolific
unexplored regions in the world.

532
00:28:01,640 --> 00:28:03,680
Now.
It's unexplored for the reason

533
00:28:03,680 --> 00:28:06,720
that, you know, it's been a
tough jurisdiction for or

534
00:28:06,720 --> 00:28:09,240
jurisdictions, I should say, for
many years.

535
00:28:09,240 --> 00:28:12,080
But geologically speaking, you
know, it's wonderful.

536
00:28:12,080 --> 00:28:16,320
And I think that if, if people
do get to explore up there,

537
00:28:16,320 --> 00:28:19,560
there's going to be some very,
very major discoveries made in

538
00:28:19,560 --> 00:28:22,400
in years to come.
And I think, you know, the, that

539
00:28:22,400 --> 00:28:25,080
fact has not been missed by a
large and by several of the

540
00:28:25,160 --> 00:28:28,600
large majors who are up there
sniffing around, looking at at

541
00:28:28,600 --> 00:28:32,280
those opportunities.
So, you know, areas like that

542
00:28:32,280 --> 00:28:35,080
that haven't been worked over, I
think have tremendous potential

543
00:28:35,280 --> 00:28:37,000
if you can actually operate on
the ground.

544
00:28:38,040 --> 00:28:42,680
Last one from me, Jeff.
What was it that Johnny Mack

545
00:28:42,760 --> 00:28:46,360
understood about Perseus's
business that others didn't?

546
00:28:48,080 --> 00:28:50,200
Johnny Mack was a great analyst,
I've got to say.

547
00:28:50,200 --> 00:28:54,000
He look, he, he took the time to
actually understand us.

548
00:28:54,000 --> 00:28:57,000
He visited our sites.
He, you know, got to talk to

549
00:28:57,000 --> 00:29:01,160
people and he, he really, you
know, made it, made a big effort

550
00:29:01,160 --> 00:29:03,280
to do that.
One of the things I really liked

551
00:29:03,280 --> 00:29:06,520
that John Rooster used to report
was, you know, a chart that

552
00:29:06,880 --> 00:29:10,960
tracked all insight costs
against or reported all insight

553
00:29:10,960 --> 00:29:13,920
cost against costs as per
movement on the balance sheet.

554
00:29:14,200 --> 00:29:18,720
You know, they are lie detector.
And I think W African resources

555
00:29:18,720 --> 00:29:22,080
and ourselves always appear at
the bottom end of the curve

556
00:29:22,080 --> 00:29:23,880
where what you see is what you
get.

557
00:29:24,320 --> 00:29:26,560
And that John was one of the
first people know, you know, to

558
00:29:26,560 --> 00:29:29,600
come up with that.
Yeah, that analysis.

559
00:29:29,600 --> 00:29:32,520
And I think, I think that is a
tremendous tool to be able to

560
00:29:32,520 --> 00:29:34,720
say, are these guys really
generating cash or not?

561
00:29:35,120 --> 00:29:38,320
Because we have actually had
situations in, you know, in

562
00:29:38,360 --> 00:29:41,560
prospective M and A where you
hear a person talk and they say,

563
00:29:41,560 --> 00:29:43,240
well, we're best in class or
false.

564
00:29:43,640 --> 00:29:45,800
And I look at the balance sheet
and go, well, well, where the

565
00:29:45,800 --> 00:29:48,640
Hell's the cash going?
You know, the fact is that

566
00:29:48,640 --> 00:29:51,960
they're not generating cash.
And for us, that's what's really

567
00:29:51,960 --> 00:29:54,720
important.
We're big fans of that.

568
00:29:54,720 --> 00:29:56,560
I think that's a great note to
leave it on.

569
00:29:56,560 --> 00:29:58,000
Thanks for making the time for
us, Jeff.

570
00:29:58,400 --> 00:29:59,640
Great.
Thank you very much for having

571
00:29:59,640 --> 00:30:01,800
me.
Very, very good.

572
00:30:02,320 --> 00:30:04,080
I assume I haven't listened to
it yet.

573
00:30:04,240 --> 00:30:05,640
I'll listen to it once this is
live.

574
00:30:05,640 --> 00:30:07,960
Safe to assume that one Maddie,
it was awesome.

575
00:30:08,080 --> 00:30:10,960
He's a real, he's a real
gentleman of the industry and

576
00:30:11,240 --> 00:30:14,160
one that sometimes we don't
speak enough about given their

577
00:30:14,240 --> 00:30:18,480
their African focus there.
But they're a a good operator

578
00:30:18,480 --> 00:30:21,160
that have just sort of it would
a pretty awesome track record

579
00:30:21,160 --> 00:30:23,400
over the past year.
He could have done it easier for

580
00:30:23,400 --> 00:30:24,800
himself.
Couldn't he run it in an

581
00:30:24,800 --> 00:30:26,920
Australian mining company?
Wouldn't have been as fun mate.

582
00:30:26,920 --> 00:30:29,360
Nah.
Good on you, Jeff Righto.

583
00:30:30,200 --> 00:30:32,760
Speaking of people just do it
easy MMS jeez.

584
00:30:32,760 --> 00:30:36,840
Like move open bit dirt bloody
easy grounded easy build a

585
00:30:36,840 --> 00:30:39,200
bloody camp piece of piss Sandy
ground support.

586
00:30:39,800 --> 00:30:43,560
Do I need to say anymore?
CRE insurance an easier review

587
00:30:43,560 --> 00:30:45,760
of your insurance policies.
K drill.

588
00:30:46,320 --> 00:30:49,800
Easily the best exploration
driller on the surface for our

589
00:30:49,800 --> 00:30:52,240
St.
Diamond salt Bush contractor and

590
00:30:52,240 --> 00:30:55,280
I don't know who else holds dirt
on the surface, not just salt

591
00:30:55,280 --> 00:30:58,360
Bush.
Pretty much SWIG 78 million

592
00:30:58,360 --> 00:30:59,600
drill.
Me.

593
00:31:00,880 --> 00:31:04,600
Project engineering by just
easily the best like to ever

594
00:31:04,600 --> 00:31:08,800
deal with Jeremy Palmer and
cross boundary energy Tim

595
00:31:08,800 --> 00:31:10,400
Taylor.
That's all I have to say.

596
00:31:10,440 --> 00:31:14,680
Leave it at that room Money.
More information contained in

597
00:31:14,680 --> 00:31:17,480
this episode of Money of Mine is
of general nature only and does

598
00:31:17,480 --> 00:31:20,280
not take into account the
objectives, financial situation

599
00:31:20,360 --> 00:31:22,320
or needs of any particular
person.

600
00:31:22,640 --> 00:31:25,680
Before making any investment
decision, you should consult

601
00:31:25,680 --> 00:31:28,760
with your financial advisor and
consider how appropriate the

602
00:31:28,760 --> 00:31:32,440
advice is to your objectives,
financial situation and needs.