PRU 3.41% $2.73 perseus mining limited

Yes Ms Muffet, when a company starts beefing up their management...

  1. 1,112 Posts.
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    Yes Ms Muffet, when a company starts beefing up their management ranks and creating peculiarly titled roles, it's usually a signal that all is not well. Operational based management roles can be effective as they can have an immediate positive impact, but multiple newly created corporate roles have always made me a little suspicious.

    Agreed loki, the ore grades at Edikan are around 1.2g/t spread across a few satellite deposits, well suited to a low-grade bulk mining approach but doesn't leave a lot of wriggle room should the POG suffer another major setback or PRU suffer a major cost blowout. According to their ASX release 14/08/12 the pit design work has been carried out at $1,200 US, so their margins are now very thin. They may well be releasing an updated mid-year Resource/Reserve update, so worth keeping an eye out for that.

    In the meantime, at an operational level they still have a big hungry mill to feed, so the pressure will be on the mining front to keep the ore delivery coming. This could cause problems in the future if the cut-off grade at Edikan increases, which would restrict available ore sources, placing even more pressure on the mining front. It could be possible to convert some Indicated/Measured Resource into the Ore Reserve category with extra drilling, but this would take time. I'm not sure how big their low-grade stockpiles would be, but the one thing in the world they'll want to avoid is having the mill static or suffering any downtime.

    I think this news is a big blow to aspiring West African focussed explorers and producers, and goldies on the ASX in general as PRU was/is definitely a well respected mid-tier company. IMO it's getting damned hard to pick even 2 or 3 gold companies you'd be wanting to back.




 
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