Perseus in the red

Movements in the US dollar and Ghanaian Cedi relative to the Australian dollar have combined with lower gold production and higher costs to drive Perseus Mining into losing territory.

The West African gold producer made a loss of nearly $31 million in the 2014 financial year, down from a profit of nearly $39 million in the previous period.

Foreign exchange movements counted for around 60 per cent of the change, at $41.9 million, with redundancy costs of $3.1 million and a doubtful debt provision of $3 million.

Managing director Jeff Quartermaine said the fall in the dollar had affected costs.

“Gold sales and expenses are both largely denominated in United States dollars, so when converted back to Australian dollars for reporting purposes, the fall in the Australian dollar relative to the United States dollar has materially increased costs and revenues in Australian dollar terms relative to the prior period,” Mr Quartermaine said.

“Notwithstanding this change, we did have a challenging year at our Edikan gold mine in Ghana which resulted in gold production falling short of budgets by approximately 10 per cent due in part to a fire in the processing plant in April 2014, a transformer failure in June 2014 and unreliable grid power supply during the course of the year.

“We also experienced escalating mining costs which currently represent approximately 55 per cent of our cost base.

“2015 promises to be much better than the year just passed with an increase in gold production expected due to improved grade of processed ore and improvements in other operating parameters including plant availability, runtime and gold recovery.”

Operating cash flow was positive, at $19.1 million, and the company said current assets exceeded liabilities by more than $70 million.

Perseus was up 8.5 per cent to 44.5 cents per share at the time of writing.