Date of Data Capture: 19/1/2018
Name: PERSEUS MINING LIMITED (PRU)
Classification: Gold Miner
Current Price: $0.43
Market Capitalisation: $455M
Forecast Sales Growth: 49.65%
Yield Estimate: 0%
Consensus Price Target: $0.53
# Covering Analysts: 8
Discount at Current Price: 23.36%
Price Target Trend: Increasing-Flat
Signal Timeframe: Quarterly-Monthly-Weekly
Trend Bias: Flat-Down / Long-Medium
Focus: Capital Growth
Set up Notes:
· PRU is looking to build a greater recovery on the back of improving gold prices and their own organic expansion with their Sissingue gold mine expected to begin production in Jan 2018.
· Fundamentals have been improving following a tough 5-year drop in gold prices and severe consolidation throughout the sector - with strong forecasts of improving sales, earnings and profits, PRU should be due a re-rating.
· Their technical outlook shows good potential for further gains with strong longer-term signalling and multi-timeframe momentum building here as price moves up from a strong support base layered between 30-40c, with resistance targets stretching higher at 60c, 80c and $1.00.
Growth Focus: Perseus Mining Ltd. (PRU)
Our primary focus here is capital gain, we will select our stocks from the ASX Top 500 All Ordinaries Index.
When in elephant country you should be on the lookout for elephants, accordingly we have our eye on Ivory Coast gold miner Perseus Mining Ltd (PRU) as they look to bring their second mine on line and in time to ride a buoyant gold price that has been on a mammoth run.
First breaking ground in 2003, Perseus is headquartered in Perth and primarily operates the Edikan gold mine in Ghana; producing 200koz/year since 2012, and are about to begin production at the first of their two gold mines being developed in Côte d'Ivoire. The Sissingué Project is currently being commissioned ahead of schedule and expects to move into first production by the end of this month and into full production by March 2018 ramping up to 70-80koz/year. The second mine in development is the Yaouré Project which received its Initial Resource and Reserve Estimates in Nov 2017 and should eventually lift their total combined production to around 500koz/year.
Fundamental performance has been mixed, with consistent production belying the volatility in share price - being more so a fair reflection of underlying gold commodity pricing which rallied 650% from 1999 to 2012 and then fell 45% through to 2015. This pricing pattern is not just mirrored in PRU but has been magnified significantly and with gold pricing improving we expect a reciprocal type of recovery in price, especially as they begin to increase production ounces on the back of their new mine. Forecasts are favourable with good growth now kicking into gear and set to continue through to 2020 with positive consensus analyst sentiment and increasing price targets.
Historically PRU began an amazing run from 2004, recording capital gains of 2500% through to 2011 before falling 95% by 2013, since when they have basically been drifting sideways and making occasional rally and pullbacks from resistance. Right now we have price rallying on good news, combining well with a strong technical set up showing positive momentum across multiple timeframes. Due to the strength of signalling we believe they are likely to continue higher through overhead resistance and begin chasing old resistance targets that stretch far above today’s price levels.
Perseus maintains a high margin business with costs of production seen continuing at around $700, giving a good buffer to any weakness to the currently rising gold price. While reducing debt will be part of their progress, we expect the company to soon shift focus to the completion of their three mine strategy and to also continue with high potential exploration. With performance improving on the back of stronger commodity prices as Perseus ramps up production - and with price breaking out of a long-term downtrend on strong signalling - we believe they will continue to increasingly tweak the myth they are named after and turn ever more stone to gold.