Perseus Mining Ltd

ASX:PRU

Earnings Call Transcript

[Operator]

[Operator Instructions]

I'll now hand over to Perseus Mining, Managing Director and CEO, Jeffrey Quartermaine. Thank you, Jeff.

[Jeffrey Quartermaine, executive]

Thanks very much, Nathan, and welcome to Perseus Mining's webinar to discuss our March '25 quarterly report. I'm joined on the call today by 2 of my colleagues, Lee-Anne de Bruin, needs no introduction. This she has been an integral part of our leadership team for quite some time and is frequently participated in these webinars. We're also joined today by Jacob Ricciardone. Now Jacob joined Perseus earlier this year in the role of Chief Development Officer with specific responsibility for exploration, tech services and development and Jacob will be available to respond to any detailed questions you may have on either our organic growth projects or similar matters later in the web now. So welcome, Lean and Jacob.

Now the agenda for today's webinar is the same as usual. I'll start by providing an overview of what Crisis has achieved operationally during the quarter. and then we'll hold a Q&A session to dive into any specific matters that have not been addressed either during the presentation or indeed in the market releases that we have made to the market, either on a quarterly or the release we put out last Monday that back to the decision to move forward with the intake development. For those of you who are participating in this webinar your computer, you should be able to track the presentation visually on your screen to meet to that point.

Now in summary, it seems that every quarter, we report month of the same thing, namely that our team in Perseus has once again delivered very strong gold production results, competitive all-in site costs and with the help of the rising gold prices, expanded cash margins and increased free cash flow and cash balances.

Now in terms of the Australian gold sector at least and possibly globally, our performance and closing cash balance, which I might say stands at USD 801 million or for our Australian business AUD 1.25 billion. It's better than most in the gold sector based on the reports that we've seen from our peers so far this month. Now this does beg the question of why our consistently strong operating performance doesn't translate very accurately into relative share price performance. This is an issue that's challenged us for some time. And several theories have been put forward about why we trade at a discount to our peers. And these include the African discount, so to speak, and the quality of Perseus asset portfolio, particularly the remaining lives of our assets. Now I won't dwell on these observations too much as in my opinion, both of them are fairly fundamentally flawed.

But rather than complain about the misunderstanding what we have done this quarter has taken some very decisive action to address both the issue of asset quality and African risk. The 2 major growth initiatives, both fully funded from existing cash reserves, I'd say, have been materially advanced during the quarter or since our last webinar, and they include the CMA underground development at our existing All-Time Auger rig or Gold Mine in Cote d'Ivoire. And of course, the commencement of the development of the Nyanzaga project in Tanzania. Now both of these initiatives will be a subject of more focused discussion in the presentation that follows as both of these projects will materially upgrade our existing production base that has a repeat, already been generating outstanding operating results consistently for the last 5 or 6 years.

Now hopefully, the quality of this new -- 2 new additions will gain some recognition. And of course, if they don't, the new operations will certainly help us to continue the long stream of outstanding results generated by the company.

So in summary, things are rolling along very nicely at Perseus, and let's go to the presentation so that I can demonstrate what I'm talking about.

So if we look at the operating and financial results in summary that we've published today. So for the quarter, production 121,605 ounces, down slightly from the prior quarter, which was in fact, an outstanding quarter. The all-in site cost across the group is $1,209 an ounce, up slightly for 2 reasons. One is that the production is down slightly, but also because of the increase in royalty payments due to the higher gold prices that we've been receiving. The gold prices averaged $2,462 an ounce, giving us a margin of USD 1,253 an ounce. Now on terms of the margin, I did read in the papers earlier this week are very prominent. You're not a Kingdom investor complaining that the gold sector hadn't taken the opportunity to generate margins. But I would point out that our cash margin is in excess of 100%. And that's generated something like $152 million of notional cash flow for the quarter, resulting in a cash and bullion balance at the end of the quarter of USD 801 million.

Now I point out that, that USD 801 million does include 34,208 ounces of gold that were valued at the spot price on the 31st of March, which is $3,115. So down from where it is today. In fact, but nevertheless, that's how that number has been arrived. I should say also, it does not include any debt. We don't have any debt even though we do have an undrawn line of credit of USD 300 million.

Now if you look at that in context with what we've done in the past, as I said, the December quarter was up slightly, but the last 4 quarters has been a fairly remarkable consistency in our performance. And during that time, we've seen the gold price rise, and we've seen the cost kept reasonably steady. All 3 operations are running reasonably well, I have to say, not without the challenges, as I'll mention in just a moment. But certainly, in this rising gold price environment, it is giving us the opportunity to significantly generate -- expand our margins and cash, et cetera, et cetera.

Now looking forward, we're now 1 month pretty much through the 3 months of the quarter. Happy to say that we're operating bank on targets at the moment, and we'll continue to deliver -- similarly good results into the future if indeed, nothing month toward happens in the next couple of months.

Now in terms of what is -- what we are predicting this chart that you can see shows the guidance that we have given to the market. Now we're obviously very well positioned relative to the forecast for the half year and the full financial year. I think if anything, what we're going to be doing is provided that nothing untoward happens between now and the end of June. We will end up in the upper quartile of the production range that we've given the market. And at this stage, we're quite some way below the bottom end of the cost range. So that's a pleasing outcome. And that, of course, has occurred that were selling the higher royalties, et cetera, that I mentioned before.

If you look at where the production's come from, I'll just quickly run through the 3 operations. So yes, All-Time Auger rig was to stand out again as it has been for some time, 57% of our total production. So it's the main contributor. The costs this quarter were down a bit on where they have been, and we have been the beneficiary this quarter of the fact that we did have accelerated stripping in the last couple of quarters. Now you'll recall I mentioned on this presentation for the last couple of quarters that we were -- we did get behind in our stripping, and we had accelerated stripping in the last couple of quarters to get back on track. We are back on track, and we're now accessing high-grade material. And so that's been what has caused this pretty good cost performance in the last quarter. The issue that is challenging us at the moment, if anything, at Yaouré or is the fact that we've moved from -- or we just opened up the Yaoure open pit. We've been mining in the CMA open pit up until now. So the geology in the ore crit is quite complicated, and our grade control procedures need to be modified to adjust to the new ore body. And at this stage of the game, we haven't quite got it right. We've got a positive reconciliation on tonnes and negative reconciliation on grade but overall positive ounces. But that's something that we're working on pretty furiously at the moment to get that right because that is important for us going forward because all from that Yaoure open pit is going to be blended with ore from the CMA underground, and I'll talk about this in just a moment. But we signed off on that operation earlier this quarter.

Now as far as Edikan is concerned, it was a little bit disappointing relative to the prior quarter, about 34%, 35% of our gold comes from Edikan right across the board, the metrics were slightly under where we had hoped they would be. But nevertheless, the costs were still fairly good in USD 1,177 per ounce. At Edikan is right in the bottom end of the global cost curve. And I think if you're a full credit to the team that we've been able to keep a lid on our costs at Edikan over the last few years. Reconciliation there is very good or is within market ranges, et cetera, et cetera. So we're not too concerned there. We have started mining in the pit, which is a new pit that was discovered a few years ago by our team. Now this ramp up -- and this is partly what's attributed to the performance this quarter, our ramp-up has been a bit slower than we were hoping for as a result of some land access issues in the area. These are gradually being addressed and not before time, I might add, given that the AG and finish pits are getting towards the end of their life. So we will be mining from Nkosuo in the next quarter in full steam ahead. And hopefully, by then, we'll have things sorted out.

Now 1 of the points I might just make on Edikan talking about, which I think is important in the context of geopolitics is that our mining licenses in Ghana have been renewed. They've been signed off by the Minister and will be presented to Parliament I believe, as part of a batch in May this year to get a parliamentary ratification. So some of the issues that have been reported in Ghana recently, I can say that most certainly don't apply to Perseus as far as outstanding in the country. We are in good standing. And we have the opportunity to extend the mine life at Edikan mine. So we've been doing quite a lot of work on strategic options, and we'll publish this data later on in the year. But certainly, we believe that there is an extended life at Edikan looking forward.

Sissingue has been a little bit disappointing in this period as well, and there are once again fairly solid reasons for that. All of the metrics have been reasonably okay other than grade. And the grade is down as a result of not accessing the higher-grade material at Fibia in the way that we wanted to do. Part of that, a large part of that relates to our contractors performance, equipment availability and productivity. We have addressed those issues by bringing in some additional equipment ourselves and hiring it back to them, and we will overcome this issue as we move forward. But certainly, the performance this quarter was not where we would like it to be. Once again, a similar sort of thing. We're getting good reconciliations across the site. And I think that the life of Sissingue, it can be extended quite materially through the strategic options that we've been evaluating. And we will, as I say, communicate those when all of that work has been completed. So the production is in reasonably good shape. And I'm now going to hand to Lee-Anne to address some of the financial metrics, please.

[Lee-Anne de Bruin, executive]

Thanks, Jeff, and hello, everybody. Good to be on the call. You'll see from the slide in front of you that our cash flow and our overall balance has grown significantly since the last time we reported, which was $704 million, it's now sitting at $801 million, including Billion. We have 0 debt and -- but still have our undrawn credit line of the USD300 million. We continue to make contributions to our host countries, contributing this $22 million in tax -- the capital expenditure for the period of $17 million. I point out, that does include $11.4 million relating to the Nyanzaga pre-FID expenditure. And we also, in the period, contributed $10 million into the share buyback, which I'll talk a little bit to a little bit later.

If we move on to the reconciliation of our all-in site cost to our all-in sustaining costs, reminding the listeners that parts has for many years reported an all-in site cost number, which is a pure cash number and doesn't necessarily agree with the IFRS all-in sustaining cost. And so we've put the slide in just to explain those differences, everybody is aware. You'll see that we have got a reconciliation because we use produced versus sold. In the period, we had inventory movements because Edikan was building up stockpiles. And then the corporate admin costs, which is included in the all-in sustaining cost is not included in the all-in pace cost number.

Moving on to the hedging position and strategy. We have always continued to focus on downside price protection to ensure the certainty of cash flows, particularly now that we have committed to the saga project over the next 2 years. However, giving consideration to the robust gold environment in which we are operating, we have our revised strategy from using spot deferred and forward contracts to a 0 cost color approach. And this does applied downside projection but does allow us for upside participation. And what we've said out there, which I won't go into too much detail, just steps out, you can see what our hedge book looks like going forward over the next 4 years. Well in years, should I say? And how the introduction of this new strategy is giving us that upside participation.

The next is the share buyback. This is our position as of the 9th April when we enter the blackout period. And so -- we have executed at that period 32.78% of the buyback, which was about $32.74 million. With the release of the Nyanzaga FID and the quarterly this morning, we will likely commence participation in the share buyback again.

And that's all for me from the financial side, Jeff.

[Jeffrey Quartermaine, executive]

Okay. Thanks, Lee-Anne. Yes, the share buyback has been pretty interesting, I have to say. And I think it has actually materially benefited our shareholders the way we've implemented it over the last few months being able to support the market when there were unusual things going on and providing some real support at times when it was needed.

Now I'd like to talk about the organic growth piece. As I said, this is a pretty important piece of our business, and something we've given a lot of attention to in the last couple of quarters. The CMA underground development was the first cab off the rank, and that was -- we announced the FID decision, the financial -- final investment decision in late January. This is an underground operation off the side of the existing CMA pit. Things are moving along very nicely on -- in preparation for cutting the first portals in July of this year. We've appointed burn cut as our contractor, they mobilized on the site and preparations are well and truly underway. And we have gone ahead with the decision based on an in principal approval by the Minister of Phil Mines, Petroleum Energy in Cote d'Ivoire. We believe that is ministerial decree will be issued in the next week or so as all of the prerequisites for the issuing of the document have now been completed. So we're in very good shape as far as the project is concerned.

Now if we look at the schedule, as I said, the burn kataris on the site working -- getting things organized, equipment has been being shipped and has been arriving on the site, and we're getting ready to get into the portal firings on the 1st July. So we're well and truly on track for that. Quite a deal of work has been done to locate the various portals and the like. And some of those areas have been exposed. Some of them will come into the -- in the future. But we're getting very much on the front foot as far as being able to move into that exercise on the schedule that we've set out.

We've got a couple of photographs on the slide on the screen just showing a few of the site works that have been underway. We've had to obviously expand our accommodation and office capacity to be able to fit another large contractor in workforce in. We've also had to upgrade a few of the services, water, power, et cetera, et cetera, to make sure that the underground operation will be fully serviced we get going. So all of those things are moving forward very strongly. And -- we're in a very good place. I believe we've been recruiting quite heavily over time, bringing in some very high-caliber people in the underground mining space, which, as people know, is new to the Perseus business.

Now the other very important project that we've initiated since the last webinar, it's been the Neon Saga gold project in Tanzania. We took an affirmative final investment decision earlier this week, and we announced to the market the position. So we're moving ahead with that project. Our budget for the exercise going forward is around $523 million, including contingencies, preproduction costs, et cetera, et cetera. So it's pretty much in line with what we were expecting it would be as we were sort of doing the work over the last 12 months. The important thing to note on this is that the funding of this project is coming via noninterest-bearing loans from Perseus to the operating company and relying on our existing cash balance of USD 801 million. So we need no external financing to go forward with the project. We -- all the money is in place. And that gives us a lot of flexibility in terms of moving forward.

One thing I would say is that we've had some very, very constructive engagement with the government of Tanzania over the last months, clarifying terms on the existing framework agreement in the shareholders' agreement, and I would say well done indeed call out Lee-Anne and her team, who will be leading the charge on that, done a terrific job, in being able to establish really strong relationships with the government and convert that into meaningful documentation that will govern the project going forward.

And just some slides to show you what we're talking about. So the tents in the air is on the eastern side of the African continent and the project in the Sissingue project sits on the southern shores of like Victoria. It's in an area where there's been quite a lot of mining in the past, particularly Barrick have been active in there North Mara. Anglo Shanda, et cetera. So these Williamson that are well known Golden Pride is another 1 usage. These are names that are very well known to the industry. So there is a long history of mining in the in the country and the Nyanzaga project will be the first new project for about 7-odd years in Tanzania. So it's very exciting for everybody.

The site is reasonably compact. It's -- we've got allocations made for waste dumps and tailings dams, et cetera. It is relatively adjacent too. Like Victoria's. So environmental management is a very, very important piece of what we're doing going forward. Now the way we're developing this project is different to the previous owners who were envisaging a small app and pit at the top and been using that -- the proceeds from that pit to fund a drive down on higher-grade material at depth and having an underground operation. What we are doing is we're going to do a single large open pit initially, and then we'll see where we go from there. So this open pit will be developed in a couple of stages. You can see on the slide the white and the blue lines being the various stages that we'll embark on. And the orange line is the outline of the pit that we've approved. Now this is what we're calling the first phase of this particular project. The difference between the orange line and the pink line are inferred resources and what we will be doing, the inferred resources center, these areas here. And what we'll be doing over time is drilling those out, converting them into indicated or measured and putting them into the mine plan. And ultimately, we would expect to end up with a pit at something aligned to that pink line, which will have a very much expanded or mineral resource and/or reserve reporting.

What we've done with the processing facility, it's a larger processing facility than it was previously envisaged. This is a 5 million tonne nameplate plan designed by our contractors like the podium, who we've worked with in the past on several of our -- all of our actually operations. And of course, Lycopodium is very well known in Africa, having built just about every decent plant in the last 15, 20 years, I would think. This plan is fairly standard. There's nothing fancy in the process flow sheet. So you got Sissingue in CIL, et cetera, et cetera, and then electrowinning. So nothing terribly fancy around this. And we believe, if anything, the plant will operate above nameplate as tends to be the case with these loco plants.

The metrics that are related to the project. I guess the important metric is that we believe that the reserve that we're working to at this particular point in time is about 2.3 million ounces, which is recently close to the previously announced reserve, which -- from which we'll extract about 2 million ounces of gold. The production will average around 200,000 ounces over the 11-year life. I mean it peaks out at about $2.46 at 1 particular point. But very importantly, the all-in site cost. It runs at around $1,200 an ounce. And that cost has been very carefully benchmarked not only against other operations in Tanzania, but also what we've actually done elsewhere on the continent.

From an investment point of view, we have used $1,700 pit shelf for the design of the mine, but use $2,100 per ounce long-term gold price in calculating our metrics. And as you can see from the slide, the undiscounted cash flows, both pretax and post-tax at 2,700 are pretty interesting, but a 2,700, they're even more interesting. And certainly, we believe that this will be a project that will generate very, very substantial benefits for all of our stakeholders as we go forward.

The production forecast, as you can see from the slides and as I said, we're averaging around the 200,000 ounce mark over the life of the project as it's currently known, but it does peak out at various times, quite a bit higher than that. So it's a pretty steady production profile and 1 that will add materially to our overall group profile going forward. So looking forward, we're very confident in our ability to deliver the project as planned. I mean Perseus, as you're aware, has successfully developed and is now operating 3 gold mines on the African continent, Medicaid Sissingue and Yaoure and doing that fairly successfully.

Now what very importantly, many of the contractors and the employees who we're engaged on the ore mill, for instance, and delivered that 1 ahead of schedule and under budget driving the covered crisis. So they'll also be working on the Insaga.So we managed to bring most of the team back together. And we think that, that will deliver some significant benefits.

Now the other good thing about this project is there's very significant in-country capacity in terms of skilled and unskilled labor and also industrial capacity. Not only that, we've got very strong support from our host communities and very importantly, the host government. So all of the ingredients that were needed there are, therefore, the project to go ahead and perform very strongly in its current configuration.

Now I've mentioned a couple of times Phase I, we do believe that there will be a second phase to this project. We've already embarked on a second phase of resource definition drilling, which we believe will add materially to the mineral resource and the reserve, and that will be announced in due course when all of the data comes in. It's not only resource definition drilling, I might add, but we're also doing metallurgical and geotechnical drilling to further inform the design of the pits and the like. And I think there are some real opportunities potentially coming from this work to perhaps improve the cost structure going forward.

Now in terms of the schedule, we've done quite a lot of work already in terms of awarding various packages and getting underway and some early works, et cetera, et cetera, and building our relocation housing. So that's going along fairly strongly, and we'll be moving into full scale development works as very, very soon. In fact, we're doing it right now. And we'll be looking to be producing first gold in the first quarter of 2027. In fact, I think I'd be very surprised if it's not a tad earlier than that, given that everybody is incentivized to deliver that outcome, but we'll stick with the Q1 to 27 for the time being.

And just a couple of photographs to show you what has been happening on the site. And you can see visually that there has been a good deal of preliminary bulk earthworks underway both in terms of preparing for the main camp and the process plant. We've got the site pretty well like demarked with fence line, et cetera, et cetera, and things are moving along pretty nicely on that front. The relocation housing has been an important piece of what we're doing. We've got -- we're building approximately 260-odd houses. I think it is for people who will be impacted by our operations. And so far, we're about 23.5% of the way through that program. We have delivered -- or we've completed 29 houses. And I think 26 of the 29 are currently occupied by very happy residents, I might say. So that program is moving along very nicely and is being very well received by our host communities.

The community consultation piece, as I said, is extremely important here. We do want to make sure that the people have kept well informed along the way and they know exactly what we're doing. We also want to make sure that people have the opportunity to gain employment on the mine site and to benefit from commercial activities in the region. So our community teams do spend a lot of time out in the ground talking to the local communities. And I think that based on our prior experience that will be beneficial as we go forward.

Also, part of that, as I said, is educating people and bringing them through into the workforce, and we've already started that process of making sure that we recruit locally to the greatest extent possible and that people have taken up the learning curve as best we can get them because they will be making a significant contribution as we go forward. I've mentioned the second phase of resource definition drilling, which is underway. I mean, -- it's a fairly healthy program that we've got in mind, and we do have some serious expectations about what that will yield. But I think the guys have got a pretty good eye on what the ore body looks like. And the work that's being done is high quality. And as I said, the aim is to deliver an upgrade and reserve before too much longer.

So that's pretty much it as far as our growth is concerned. I haven't mentioned, of course, the other initiatives that we have, I mean, we have the Mason project in Sudan that we're looking at various options there to try and see how we can best add value to our shareholders. Through that exercise, we've also got a few unlisted investments around the place. And I think actually, the value of those unlisted -- of those listed investments, something like USD 111 million. So if you're looking at the liquidity of the company, you can add $111 million to the $801 million of cash, and that sets the purchases in fairly good shape to fund its way going forward.

Now I've mentioned a couple of times, particularly in relation to Nyanzaga, the importance of the sustainability piece of the ESG pieces and right across the company, that is something that is very important to us. So safety is a primary focus and the safety statistics that we are generating month in, month out. I think, a very, very credible in any company, let alone the African continent. In fact, they're as good as you'll see globally, where we've got a Trio, which is well down on a lot of our other peers.

The community contribution, Lee-Anne mentioned that earlier on, we continued to put quite a strong economic contribution into all of the countries where we operate, Ghana, Cote d'Ivoire, Tanzania, Sudan. This is not -- this takes several forms. I mean, clearly, employment is 1 and taxation is another. And of course, procuring from the local vendors is very important. But fairly significant amounts of money are going into the economies of those countries and we think that is important.

Local employment is terribly important in terms of being able to give people opportunities. And we do our best in terms of diversity in all the forms that it takes. People like to focus on gender diversity more than some of the other forms. And in that respect, we to -- we've got about 15% female employees in the workforce. But I would hasten to mention that people should read that number in the context of the cultures that we're operating in. This is not Australia. This is the South African countries where they have a different approach to life. And so quite understandably, the proportion of female employees is down and what you might find in a Western environment.

We have no significant community events during the period. And I think that reflects the work we put into working with our host communities. And similarly, on the environmental front, we're in pretty good shape there as well with no significant environmental issues causing concern. So look, grown across the board, things are traveling quite well, as I said at the start of the call. We have had a good quarter on all fronts, and now we've been continuing to produce gold, all-in site cost, cash flow, et cetera, et cetera. And as I said, pleasingly, this work has been conducted in a safe manner. We are a little ahead of our safety targeted safety standards, and we do compare fairly well with our peer group. So that's extremely, extremely gratifying and important to us.

Now looking forward, our production and cost guidance for the 6 months to June '25 is unchanged, as I said earlier, and we are predicting very solid performances relative to that half year and full year guidance that we've given. And looking further into the future, we are embarked on -- we're currently above in our annual planning cycle. And before long, we expect to be able to publish an updated long-term production and cost forecast for the entire Perseus Group based on these revised plans. And I've no doubt that what this will do is provide further clear evidence that our strategy of producing between 500,000 and 600,000 ounces of gold per year at a cash margin of no less, but usually a lot more than $500 an ounce will continue for some time into the future. And that's irrespective of any other M&A activity we'll do into the future. Now I have been promising that group forecast for some time. And we are in the process of putting it together. What we're trying to do is to ensure that we maximize value from our existing asset base before we go public, and we don't want to go prematurely, we want to be able to show our investing public what we're going to do and then be able to deliver on that plan, and that will be coming up fairly shortly.

What we are also trying to do is part of that exercise is to is to smooth out our production profile going forward. And we're doing a fairly good job on that, I might say, given that when we took a decision to postpone the development of the May Sand project in 2023, it did cause a little bit of a hiccup as far as our production profile is concerned, but that's been largely addressed through antigen the CMA underground and the like. But there is more work to be done before we can go public. And so as soon as we can, as I say, we'll release that information.

Also, looking forward, the concept of us continuing to look to grow our diversified asset portfolio will remain very important for us. And we believe that -- we are able to -- by being involved in multiple operations in multiple countries, we are able to remove a lot of the volatility that comes to that operating on the African continent.

Importantly, this means that as an investor, you can be confident that your investment in Perseus remains in very solid in good hands. And this is an important point, I think, in terms of addressing this issue of African just being an African discount on the share price. We do operate well on the African continent, and we have been doing it for quite a long time. Now it's not a guarantee that's going to continue into the future, but it's a pretty good indicator. I think that this issue of African discount is somewhat overdone. We will, however, continue to remain very receptive to new ideas. And if the right value creation opportunities come along, then Perseus is in a great position to execute to continue on our growth journey. I'd say these opportunities are fairly few and far between at the moment, but particularly given where the gold price is, but we do live in hope. And we do have the capacity to execute at a moment's notes should the right opportunity come by.

So as a company, our focus on generating material benefits for all of our stakeholders is -- remains a very prominent for us. And I'm talking about house governments, communities, employees, providers of goods and services and, of course, our investors. And we will remain very focused and vigilant on that and continue to deliver our stated mission of the company, and that's something that we are very proud to have achieved today.

Now in conclusion, I do once again want to acknowledge the fantastic contribution made by all of the men and women that make up the Perseus Board management and operating teams in what is now 5 countries in which we operate -- including Australia, where we're headquartered. There is absolutely no doubt that as a team, our people are strongly supported by their families, and I can't emphasize the importance of the family support enough. We continue to do an outstanding job, and I want to sincerely thank you all. Many of you who are listening into this call today. But I want to thank you all for that on behalf of all of our shareholders, and for all of the efforts that you've been delivering and helping us to continue delivering on our promises.

So thanks very much for your attention today. This brings my presentation to close. And now Lee-Anne, Jacob and I are happy to address any questions that you may have. Thank you.

[Operator]

[Operator Instructions] First question comes from Levi Spry at UBS.

[Levi Spry, analyst]

Not a nice quarter A couple of quick questions starting with Nisarga. So -- can you just comment on, I guess, the aims of the optimization. So obviously, markets, we're always pretty impatient, but some of the assumptions are probably a little bit more conservative than what I've had previously. So can you just talk to that second phase what the goals are with that reserve update? Is it about life extension and adding value that way? Or can you squeeze a bit more grade upfront early?

[Jeffrey Quartermaine, executive]

Well, I think we're looking at expanding the reserve full stop at this particular time. Now whether we do expect that the grade will be beneficiary, but whether it is reflected immediately. I'm not 100% sure. But 1 of the optimizations or 1 of the areas where we may see some improved performance through there is in the actual throughput rates of the plants every plant that we've built in the past with the help of Lycopodium seems to outperform the nameplate. Now the nameplate of this 1 is 5 million tonnes per annum, but it wouldn't surprise me if we don't -- we're not putting more material through than that actual name would suggest. But certainly, that's an issue that -- where we believe we've got some benefit. We believe that we can expand the size of the resource -- the open-pitable resource quite significantly. And that will be, as published within -- before we start actually producing.

But the other area that is of interest to us, and I can't say very much about this at this point other than to say that the guys brought back some dual results at depth the other day. And there's not a lot of them, but what we saw on them certainly give us optimism that even though we're building a very large open pit in a full 500-meter deep pit, there is still very significant potential for an underground operation off the bottom of that. As we go forward and as we get further down in the pit, we will be drilling further down there to confirm that. But that's an possible extension that's not even remotely factored into any numbers at this particular point. So look, we believe that this inside project can and will develop into a world-class operation and have very little doubt about that.

[Levi Spry, analyst]

And then just moving to Sissingue, a bit of a tougher quarter there. Can you just talk to the future of that operation and any potential for maybe recycling that asset as you've got growth elsewhere in the portfolio?

[Jeffrey Quartermaine, executive]

Yes. Look, the plan as it stands at the moment, I mean I think on the reserve, it's something like about a 3-year life from now. But we believe that by reassessing some of those pits, we can actually extend the life well beyond that. Now what that involves, of course, is using a higher cutoff the higher gold price on the picture. And of course, what that means is that your operating cost goes up. So you need to be able to trade off production against margin basically. And it does depend on your view on the gold price. Where we're going with the project now though, is that we're about to start opening up the age deposits. We've been mining at Fimbiasso and Sissingue over the last couple of years calling or from Fimbiasso back to Sissingue. We're now about to open up bag way, and we'll be holding back from there later this year, and we'll be mining down there and I think there's 3 pits down there at the present time that we have delineated. So it's got a reasonable future. And in fact, the production levels that are budgeted for next year, not quite materially above where we are this year because the grade from bag way is quite attractive.

Now what actually happened was that when we started mining at Fimbiasso, we discovered that, in fact, there was actually quite a lot more ore than we had originally envisaged. -- what we decided to do was to mine out those deposits before we went to backwash. So we deferred opening Bawag by about a year, basically, while we mined out Pemba. Now while there's all there, it is at a lower grade than Bagley, so that's partly what contributed to the dip in production this year and the like as well as some operating challenges, of course, that I mentioned earlier.

But look, Sissingue has got a pretty decent life ahead of it, pretty decent remaining resource. When you started this project it had a 4.5-year mine life. I think based on what we're talking about now, 9 years from start to finish is certainly not out of the order of possibility. And so we'll look at that in the context of our portfolio if we bring in other assets that are producing a lot more in demand management time, then we may consider that this project might be better off in somebody's hands. So we haven't reached that decision point at this particular stage. But it has to be an option that we consider.

[Levi Spry, analyst]

Yes. Got it. Okay. And just last one, sorry, juggling a few calls here. But did you mention any of the upcoming catalysts for reviewing your investment in bank and PDI.

[Jeffrey Quartermaine, executive]

No, I didn't, actually. But I think it's well now that we've entered into a confidentiality agreement and Sissingue agreement with predictive. We can't make an investment decision until we've had full access to data and evaluate what the opportunity is worth. I would say that, that if you look at predict in Banca and compare it to, say, Nyanzaga, it's multiples more costly than what the Nyanzaga project has ever been. So in the current environment, it looks it looks pretty darn difficult, but you never know, the data may tell us a different story. But we don't have any plans for it at the present time. We're very comfortable to sit where we are and see what the future holds.

[Operator]

Your next question comes from Richard Knights at Barrenjoey.

[Richard Knights, analyst]

Just 1 on grade reconciliation or the grade and tonnage reconciliation at CMA open pit. I'm just wondering how to think about that over the next 12 months? I mean, obviously, it's been positive by an order of magnitude over the last 12 months.

[Jeffrey Quartermaine, executive]

CMA open pit is time. Where the challenges is in the Yaouré, which is a new one. So the geology is really quite complicated. There are a number of structures there coming in at different angles and things like that. And just the grade control techniques that we've used and weren't giving us as accurate a result as we're used to seeing. So we've -- Jacob and his team have been working variously on this to rectify the processes. And I think Jacob can make a comment if need be on it, but we are making good progress, and we expect to see improvements coming forward. So it is an important point because there is definite mineralization, a lot of mineralization there, and we want to make sure that, that mineralization gets captured and put in the mill, not lower grade material.

[Richard Knights, analyst]

So what percentage of the feed over the next 12 months will come from that or open pit roughly?

[Jeffrey Quartermaine, executive]

Top of my head, I don't have that number. But as we go forward, I did have those numbers actually. When we'll be using the Yaoure open pit in combination with the CMA underground, I think something like 70% to 80% of the ore will come from the Yaoure pit, but 50% of the grade will come from the CMA underground. So it's something like that. I mean, those numbers are in the public domain, and I just can't recall them exactly. But -- so getting Yaoure right is really important for us. And that's why we've put such a concentrated effort into addressing that reconciliation issue because it's not something that we're comfortable with. It's something that we have to fix in short order.

[Richard Knights, analyst]

And just 1 more follow-up on Nyanzaga, I mean you've talked about the Phase II potential there. Is that something we're going to hear about in 2025? Or is that a sort of a longer-term story?

[Jeffrey Quartermaine, executive]

Well, look, I think it will take us all of '25 to do the drilling, I would say. And then some -- so we won't begin this calendar year, I don't expect, but next year, it will be coming through. So look, it's just part of the ongoing process of what we did. We could have deferred development and drill the whole thing out before we started, but we thought that taking what we've got for the time being made a lot of sense. It allowed us to get into production earlier to address the longer-term production profile of the company, and that we'll backfill with additional reserves as and when they're delineated, assuming that they are, of course.

[Operator]

So I'll now hand back to Jeffrey Quartermaine for closing remarks.

[Jeffrey Quartermaine, executive]

Okay. Well, look, thanks very much. I know we've taken a lot of time in today. It's another busy day for many people. So apologies for that. But look, we are very comfortable with the way we're tracking. I think we're generating some fairly significant benefits here for our stakeholders, returning money to shareholders, both in the form of dividends and the share buyback, and we expect that, that will continue into the future.

So look forward to keeping you informed as we go forward. There's lots on the horizon. We've had a very busy 3 months, but I think it's been a very productive 3 months and long way that continue. So thank you very much, and look forward to talking to you again.