Ann: Quarterly Activities Report-PRU.AX, page-48

PRU reported March Q gold production of 37.15koz (Dec Q: 32.4koz) at cash costs of US$1034/oz ($1290/oz) and AISC of US$1441/oz ($1408/oz).

• Guidance for H2FY16 has been downgraded from 95-115koz at AISC of US$1100-1300/oz to 75-90koz at US$1350-1550/oz due to mill availability and grade control issues.
• Cash and bullion as at 31 March 2016 was A$72m (31 Dec 2015: A$99m).

Impact

• Issues at its Edikan mine regarding delayed access to high grade ore; grade control issues and mill availability have necessitated a significant c20% decrease in production guidance for H2FY16 with the commensurate increase in costs. This is a disappointing outcome as these issues were supposedly under control when its delivered its Dec Q report.
• We see significant value in PRU if it can deliver on its recently published revised life-of-mine plan for Edikan. This plan is forecasting substantial free cash flow from FY18-24. However, given the history of operational issues, the market is likely to be conservative in factoring in this future performance.
• The completed merger with Amara Mining PLC creates a larger, West Africa focused gold company with c7Moz of ore reserves andc14Moz of resources; and a pipeline of 2 advanced mine development opportunities in Cote d’Ivoire.