Perseus nears production in Ghana (December 08, 2010)

Vancouver – With less than a year to go before it joins the ranks as a gold producer, Perseus Mining (PRU-T, PRU-A) is pulling promising infill and exploration results from both of its key projects: the Central Ashanti gold project in Ghana, which is under construction, and the Tengrela gold project in Cote d’Ivoire.

Central Ashanti is a 650-sq. km property sitting astride the Ashanti gold belt in southwest Ghana. Perseus is currently building a processing facility at the site, aiming to tap into at least three of the eight deposits that lie within 5 km of the mill.

The three most advanced deposits at Central Ashanti are Abnabna-Fobinso, Fetish, and Esuajah North. These three provided the basis for a feasibility study completed in mid-2009, which then propelled the project into development. But Perseus never planned to mine just three zones – it used those three zones to get into development as quickly as possible and is now exploring the rest of the project area.

All told, the plan looks pretty solid. Perseus is ten months away from commissioning the mine at Central Ashanti, which is expected to produce 220,000 oz. gold annually for its first four years. Its exploration programs at the project are going very well and a satellite project 30 km away, known as Grumesa, could likely provide additional feed for the Ashanti mill. On top of all that, the Tengrela project in Cote d’Ivoire just produced a positive feasibility study and the company’s finances are solid: $130 million in the bank and an US$85-million debt facility as yet untapped.

The latest news from Perseus included drill results from all over Central Ashanti and Tengrela. At Central Ashanti, the company has been working to infill and expand the defined pits at Fetish and Abnabna-Fobinso, prove resources at another deposit known as Esuajah South, and probe new exploration targets.

At Fetish, which is 5 km east of the mill, infill drills returned such results as 13 metres grading 13.3 grams gold per tonne from 187 metres depth, 7 metres grading 19.2 grams gold from 55 metres depth,  and 10 metres averaging 7.6 grams gold from 178 metres downhole.

Esuajha South, the next deposit Perseus wants to incorporate into the mine plan, sits roughly 1 km northwest of Fetish and has returned exceptional results of late. Hole 6 cut 16 metres grading 3.7 grams gold from 240 metres followed by 39 metres grading 6.5 grams gold from 301 metres depth. Holes 7 and 8 returned lengthy intercepts – 111 metres averaging 2 grams gold from 140 metres downhole and 151 metres of 2.8 grams gold from 136 metres depth. Hole 10 hit 78 metres of 2.1 grams gold from 216 metres and hole 11 returned 68 metres of 3.3 grams gold from 167 metres.

The current phase of drilling at Esuajah South is now complete. Perseus is now working to update the resource, which currently stands at 6.9 million indicated tonnes grading 1.7 grams gold. The company is also designing a pit shell for the deposit. The granite body that hosts mineralization at Esuajah South gradually increases in width with depth: on surface it is less than 30 metres wide but 400 metres below surface it is more than 80 metres across. Perseus points out that this wide, higher-grade granite at depth indicates good potential for a combined open pit and bulk-underground operation.

And two exploration targets are also producing interesting results. At the Chirawewa target, roughly 1 km south of Fetish, hole 6 intercepted multiple gold zones, including 31 metres of 3 gram gold, 10 metres of 2 grams gold, 4 metres of 9.5 grams gold, and 1 metres of 30.8 grams gold. And the Bokitsi target produced such intercepts as 8 metres of 11.8 grams gold, 12 metres of 5.4 grams gold, 12 metres of 2.7 grams gold, and 12 metres of 5 grams gold.

Gold mineralization at Central Ashanti occurs in quartz veins, stringers, and stockworks within granitoids. Altered metagranodiorite intrusive bodes and shear zones also carry disseminated mineralization. The project area is home to an historic gold mine that produced some 300,000 oz. gold from an open pit, heap leach operation that operated between 1994 and 2001.

Perseus plans to release a resource and reserve update for Central Ashanti before the end of the year. In the meantime, it is busy building a mine.

The Central Ashanti mine plan, based on just three deposits, predicts a 10-year mine life. In its first four years the operation should produce 220,000 oz. gold annually; over its entire mine life production will average 192,000 oz. Perseus is spending US$147.9 million to build the operation; for that investment the company should be able to produce an ounce of gold for US$494.

The open pit mine will utilize contract mining and recover gold with a combination of carbon-in-leach and flotation. Using a gold price of US$850 per oz., the project generates a 50% internal rate of return, enabling payback in less than two years.

Site works are now well advanced, with a significant portion of the concrete work completed. All major contracts have been awarded, procurement is well advanced, and pre-production mining is scheduled to commence in March.

And the Grumesa gold deposit, located just 30 km east of Central Ashanti, could likely provide further mill feed. In 2007 a prefeasibility study indicated Grumesa represents a satellite production opportunity.

Perseus has to date funded development work at Central Ashanti through equity, but the company is now primed to tap into a US$85-million debt facility from Macquarie Bank and Credit Suisse. The debt facility required Perseus to hedge 230,000 oz. gold, which it did at a weighted average price of US$1,250 per oz. The hedging represents 25% of expected production to the end of 2014.

The company expects that, after building Central Ashanti and financing exploration costs through to mid-2011, to still have A$100 million in the bank, leaving it well positioned to develop its second gold mine at Tengrela.

And that dream recently took a major step towards reality with the publication of a positive feasibility study. The project’s Sissingue deposit, which hosts 9.8 million indicated tonnes grading 2.5 grams gold plus 3.4 million inferred tonnes averaging 1.7 grams gold, could support an open pit, carbon-in-leach operation churning through 5,000 tonnes of ore daily to produce 106,400 oz. gold annually. The project should cost just US$155 million to build and is expected to generate a 65% internal rate of return, using a gold price of US$1,000 per oz.

Resources defined to date only support a mine life of six years, but recent drill results indicate good potential to expand the project’s gold count. For example, wide spaced exploratory drilling 650 metres east of Sissingue returned 8.5 grams gold over 20 metres in the bottom of hole 24. Perseus notes the intercept occurred in an area of low gold-in-soil, which increases the potential to find gold at depth along the entire 650-metre gap.

Other strong results from Sissingu of late include 68.5 metres grading 4 grams gold from 26 metres depth, 22 metres of 5.1 grams gold from 18 metres depth, 7 metres of 13.1 grams gold from 21 metres depth, and 6 metres of 10.7 grams gold from 34 metres downhole.

Perseus gained 14¢ on news of its latest results from Central Ashanti and Tengrela to close at $3.26, close to its 52-week high of $3.89. Shortly after listing on the Toronto Stock Exchange in February the company’s shares were worth just $1.50 (the company has been listed on the Australian Stock Exchange since 2004). Perseus has 421 million shares outstanding.