Gold miner Perseus has outperformed Northern Star and Evolution Mining on most financial metrics. What will it take for investors to get onboard?
When Jeff Quartermaine kicks off his investor roadshow in Sydney this week, don’t be surprised if the Perseus Mining boss spends a fair bit of time talking about rival gold miners Northern Star and Evolution Mining.
The first is pretty simple, Perseus’ $476.7 million annual financial 2023 profit was bigger than the $301 million and $163.7 million underlying profitsPerseus’ balance sheet compares well too; Quartermaine has $US542 million of cash and bullion to play with, compared with Northern Star’s $362 million cash war chest and Evolution’s $1.7 billion net debt.But when it comes to market capitalisation and valuation metrics, Perseus is the poor cousin. Perseus was worth $2.
Sovereign risk is the reason Perseus trades at a steep discount to its peers. While Northern Star and Evolution mine in Australia and North America, Perseus digs its gold in Ghana and Ivory Coast. Reputation conscious companies like Rio don’t stay in places like modern-day Guinea unless important stakeholders like the US and UK governments have signalled to them that the new regime is tolerable .
So should Perseus give up its pursuit of the sort of market valuation given to Australian miners and start rewarding investors through dividends? Quartermaine says dividends will be part of the story, but most shareholders “tell us they want us to grow and to acquire incremental ore reserves to ensure longevity of production”., perhaps sooner rather than later.
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