Rising Royalties and Lower Grades Challenge Perseus Mining’s Cost Control
Perseus Mining reported a mixed December quarter with stable overall production guidance but rising costs and strong cash reserves, while advancing key projects in West Africa and Tanzania.
- Quarterly gold production down 11,065 ounces to 88,888 ounces
- All-in site costs increased to US$1,800 per ounce due to lower grades and higher royalties
- Strong cash and bullion position of US$755 million with zero debt
- Nyanzaga and CMA underground projects progressing ahead of schedule
- FY2026 production guidance unchanged but AISC updated for royalty hikes and price assumptions
Quarterly Performance Highlights
Perseus Mining has released its December 2025 quarter and half-year results, revealing a nuanced operational picture. Total gold production for the quarter stood at 88,888 ounces, down by 11,065 ounces compared to the previous quarter. This decline was primarily driven by lower head grades and reduced mill runtime, particularly at the Sissingué Gold Complex where production fell 42% due to a switch in ore sources and increased reliance on lower-grade stockpiles.
Despite the production dip, the company reported an average gold sale price of US$3,437 per ounce, up US$362 from the prior quarter, which helped maintain a positive cash margin of US$1,637 per ounce. However, all-in site costs (AISC) rose to US$1,800 per ounce, reflecting the impact of lower output and a 2% royalty increase currently under negotiation in Côte d’Ivoire.
Financial Strength and Hedge Strategy
Perseus remains in a robust financial position with US$755 million in combined cash and bullion, zero debt, and an undrawn US$400 million credit facility. The company’s hedge portfolio was adjusted to reduce committed hedges to 11% of forecast production over three years, balancing downside protection with upside potential amid volatile gold prices.
Notably, the weighted average strike prices on call options range between US$3,110 and US$4,659 per ounce, while put options provide a floor around US$2,619 per ounce. This strategic hedging approach underscores Perseus’s cautious optimism in navigating market uncertainties.
Project Development and Growth Outlook
Operationally, Perseus is advancing several key projects. The Nyanzaga Gold Project in Tanzania is on track for its first gold pour by late January 2026, with process plant construction and tailings storage facility development ahead of schedule. Similarly, the CMA underground project at the Yaouré Gold Mine has achieved significant milestones, including the first ore mined from the Blika portal and completion of critical surface infrastructure.
Meanwhile, the company is progressing its resettlement action plan and infrastructure upgrades, reflecting a commitment to sustainable development and community engagement. These initiatives are complemented by ongoing drilling programs aimed at resource definition and feasibility studies.
Guidance and Market Context
Perseus has maintained its FY2026 group production guidance between 400,000 and 440,000 ounces, with all-in site costs forecast between US$1,600 and US$1,760 per ounce. The company anticipates production to be weighted towards the second half of the financial year, supported by higher-grade ore from Edikan and Sissingué mines.
However, the updated AISC guidance reflects the impact of increased royalties and evolving gold price assumptions, factors that investors will watch closely. Perseus’s ability to manage these cost pressures while delivering on project milestones will be critical to sustaining its growth trajectory.
Bottom Line?
Perseus’s solid cash position and project momentum provide a buffer against rising costs, but upcoming royalty negotiations and production mix shifts warrant close investor attention.
Questions in the middle?
- How will the 2% royalty increase in Côte d’Ivoire ultimately affect Perseus’s margins and project economics?
- Can Perseus sustain production growth at Nyanzaga and CMA underground to offset lower grades elsewhere?
- What impact might fluctuating gold prices and hedge positions have on Perseus’s cash flow stability in FY2026?
