On 11 June 2014, Perseus received GH¢20.0M (USD6.7M) as a partial payment of the outstanding VAT debt of GH¢97.5M (USD32.7M) owed to the Company by the Government of Ghana. Based on dialogue with the Government, two further payments of GH¢10.0M (USD 3.3M) and GH¢ 17.6M (USD 5.8M) are currently scheduled to be made on or around 24 June 2014 and 8 July 2014 respectively.

The Company is continuing to work with the Government to agree a schedule for the repayment of the balance of the outstanding debt and also to avoid a repeat of the current situation where a large VAT receivable accumulates and remains unpaid for an extended period.

Comment from Managing Director, Jeff Quartermaine
"It’s pleasing to receive GH¢ 20 million of the debt owing from the Ghanaian government and to have been informed of a payment schedule for a further GH¢ 27.6 million. Perseus remains debt free with a strong cash position which will be further enhanced by receiving the full VAT payment from the Ghanaian Government. We are looking forward to putting the issue of the outstanding VAT receivable behind us.

The availability of grid power to the Edikan Gold Mine has also been frustrating in recent times. We have been working extremely hard to address the matters that we can control such as operating performance and operating costs, and in the past 12 months we have made major advances on both fronts.

When it comes to repayment of VAT and the availability of grid power, these are outside of our control but they certainly do take the gloss off what would otherwise be a creditable performance at the Edikan Gold Mine by our hard working team of employees and contractors."

GRIDCO SUBSTATION FAILURE
At 7:40pm on Saturday 7 June 2014, a current transformer (CT) failed in the sub-station owned and operated by the government owned power company GridCo, which is located on the site of Perseus’s Edikan Gold Mine. The exact cause of the failure of the CT is unknown.

The failure of the CT resulted in damage to all three Voltage Transformers (VTs) on the circuit, failure of insulators and damage to several of the cables that feed power to the Edikan processing plant. This resulted in a total power outage to the plant and subsequent significant downtime for Edikan’s ore crushing and milling operation while the repairs could be completed. As the failure occurred on the 11,000 volt line that is rated to 1,200amps, the repairs had to be performed by GridCo who operate and maintain the substation.

The CTs and VTs that failed were not standard GridCo components and were not carried as spares by GridCo, however suitable CT replacements of a different design/configuration were able to be sourced after a short delay. The different design/configuration of the replacement CTs also necessitated replacement of some busbars and removal, modification and installation of the mounting plates, brackets, and platforms. These tasks were all carried out by GridCo.

As a remedial measure, the VTs and damaged insulators were removed from the power factor correction circuit. This has rendered the power factor correction circuit inoperable until full repairs can be carried out. As a result, Edikan is required to reduce its power demand in the evenings during the peak demand period until Gridco is able to source the replacement parts. Gridco is expected on site during the planned SAG mill maintenance shutdown on 17 June 2014 to carry out additional works on the substation.

Due to high voltage and current involved there was also damage to the main feeder cables to the plant. This required two of the cables to be terminated and the replacement of a connection lug. This work was carried out by Perseus’s maintenance personnel.

Following the repairs, the SAG mill was restarted at approximately 21:00 hours on Tuesday 10 June 2014 after approximately 73 hours of unscheduled downtime.
The impact of this interruption to gold production at Edikan is that Perseus will be challenged to achieve its revised production guidance for the three, six and 12-month periods ending 30 June 2014. This is extremely disappointing to management as following the resumption of gold production after the fire in the cyclone nest at the Edikan processing plant in April 2014 the Edikan operation has performed strongly and was on target to achieve guidance as a result of the continued improvement in operating performance.