PERSEUS MINING LIMITED — Interim / Quarterly Report 2013

Nov 11, 2012

November 9, 2012

MANAGEMENT'S DISCUSSION & ANALYSIS For the three months ended September 30, 2012

This Management's Discussion and Analysis ("MD&A") of Perseus Mining Limited and its controlled entities ("Perseus" or the "Company") is dated November 9, 2012 and provides an analysis of the Company's performance and financial condition for the three months ended September 30, 2012 (the "September 2012 Quarter" or "Quarter").

This MD&A should be read in conjunction with the Company's audited consolidated financial statements and notes thereto for the year ended June 30, 2012 (the "2012 Financial Report"), and the Company's unaudited interim consolidated financial statements for the September 2012 Quarter. The financial statements (and the financial information contained in this MD&A) comply with Australian Accounting Standards as issued by the Australian Accounting Standards Board and International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board. These documents are available under the Company's profile on the Canadian System for Electronic Document Analysis and Retrieval (SEDAR) at sedar.com and on the Company's website, www.perseusmining.com.

This MD&A may contain forward-looking statements that are subject to risk factors set out in a cautionary note contained herein. Examples of some of the specific risks associated with the operations of the Company are set out under "Risk Factors". All monetary amounts are stated in Australian dollars, except as otherwise stated.

COMPANY OVERVIEW

Perseus was incorporated in Australia on October 24, 2003. Perseus's corporate office is in Perth, Western Australia. On September 22, 2004, the Company's shares were listed for trading on the Australian Securities Exchange ("ASX") and on February 3, 2010 the Company's shares commenced trading on the Toronto Stock Exchange ("TSX"). The Company's shares are also listed on the German Stock Exchange.

Perseus is a successful integrated gold company whose activities include exploration and evaluation, development and gold production. The Company conducts its activities on under-explored gold belts located in West Africa.

Its principal assets are:

• A 90% interest in the Edikan Gold Mine ("EGM") (previously referred to as the Ayanfuri gold deposit or the Central Ashanti Gold Project), a newly commissioned gold mine located in Ghana. In July 2009, the Company completed a definitive feasibility study (''DFS'') on developing a mine and associated treatment facility for the EGM and based on the positive outcome of that DFS, construction of a gold mine and associated processing facility commenced in June 2010. The first gold pour and the first revenue received from the EGM took place on August 21, 2011 and on September 28, 2011 respectively. Commercial Production was declared on January 1, 2012.
• An 85% interest in the Sissingué gold deposit, a development stage gold project (the ''Sissingué Gold Project'' or "SGP"). The Sissingué gold deposit was discovered during an exploration programme (the "Tengrela Gold Project") focussed on the Tengrela exploration tenements located in the north of Côte d'Ivoire. In November 2010, the Company completed a DFS on developing an open cut mining operation together with a conventional carbon in leach ("CIL") gold processing plant and related infrastructure based on the Sissingué gold deposit. The Company's 85% interest in the SGP reflects (as if it has been granted) a 10% free carried interest in the mine-owning company which is required to be allocated to the Government of Côte d'Ivoire in consideration of the issue of an Exploitation Permit pursuant to the current Ivorian Mining Code.
• A 90% interest in the Kayeya gold deposit which forms part of the Grumesa Gold Project ("GGP''), an exploration stage gold project located 30 kilometres to the east of the EGM in Ghana. Previous studies indicated that the GGP represents a potential satellite production opportunity to the larger EGM. The Company's 90% interest in the GGP reflects a 10% free carried interest in the mine-owning company which is required to be allocated to the Government of Ghana upon the issue of a mining lease.

In addition, Perseus owns (i) a 23.0% interest in Burey Gold Limited ("Burey"), an ASX-listed junior exploration company holding a portfolio of gold exploration properties in the Republic of Guinea in West Africa; and (ii) a 23.7% interest in Manas Resources Limited (''Manas''), an ASX-listed company that owns a portfolio of gold properties in Central Asia that were sold to Manas by Perseus in mid-2008.

Perseus has long-term debt obligations under the terms of a project finance facility that was fully drawn to US$85 million on June 23, 2011. Since the initial drawdown, and as at the date of this MD&A, US$31 million has been repaid under the facility leaving an outstanding balance of US$54 million. Associated with the establishment of the project debt facility, the Company sold forward 230,000 ounces of gold. A total of 70,000 ounces of gold has been delivered under forward sales contracts up to and including September 30, 2012 and following the successful restructure, extension and up-sizing of the debt facility, a total of 70,000 ounces of gold was sold forward, restoring the outstanding balance of gold hedging to 230,000 ounces of gold at a weighted average gold price of US$1,365 per ounce. (Refer to the section below titled "Liquidity and Capital Resources").

HIGHLIGHTS OF THE SEPTEMBER 2012 QUARTER

Overview

Gold production of 52,610 ounces during the September 2012 Quarter at Perseus's EGM was in line with June 2012 Quarter (the "June Quarter") production but 4% under the forecast production guidance range of 55-60,000 ounce for the Quarter. Cash costs (after accounting adjustments) for the Quarter were US$475/ounce, 30% lower than June Quarter cash costs and 17% lower than cost guidance. Total ore and waste movements of 4,119,664 bank cubic metres (" bcm") for the Quarter exceeded targets by 12% while head grade at 1.46 g/t was 5% above target and total plant recovery at 87.7%) in line with target. The average hourly mill throughput rate during the Quarter of 761 dry tonnes per hour ("dtph") equates to annual throughput of 6.0Mt at 90% plant availability, which exceeds the 5.5MTPA name plate capacity of the plant by 0.5MTPA. Based on performance during the Quarter the Company's guidance for the December 2012 Quarter and the full financial year ending June 30, 2013, remains unchanged.

An Exploitation Licence for the SGP was granted by the Government of Côte d'Ivoire on 8 August 2012. Early development works expenditure was approved by the Board and is underway however, a commitment to full scale development of the gold mine has been temporarily placed on hold pending the clarification of the fiscal regime that will apply for the duration of the of the expected life of the mine. A detailed review of the SGP mine plan, capital and operating cost budgets was completed indicating moderate changes to the October 2010 Feasibility Study economics.

A total of 23,719 metres ("m") of drilling was completed on Perseus's exploration projects during the Quarter including 5,115m in Ghana and 18,604m in Côte d'Ivoire. Significant drill intercepts were achieved from multiple deposits.

As at September 30, 2012, Perseus had an available cash balance of $108.758 million (excluding $8.641 million in escrow) plus 2,929 ounce of gold on hand and a further 5,332 ounce of gold at the refinery at 30 September 2012.

Subsequent to the end of the Quarter, the Company's US$85 million project debt facility was restructured into a revolving line of credit with the facility limit increased to US$100 million and the term extended to December 2015. The facility is currently drawn to US$54 million and has an associated gold price hedging programme involving of 230,000 ounces of gold at a weighted average sale price of US$1,365/ounce.

EGM, Ghana

The EGM is located on the Ayanfuri and Nanankaw mining leases in the Republic of Ghana, in West Africa. These mining leases together, with the adjoining exploration license areas of Grumesa, Kwatechi, Dunkwa, Nsuaem and Nkotumso that are also held by the Company, cover a total area of about 650 square kilometres.

Gold Production Operations

The total of 4,119,664 bcm of ore and waste mined during the September 2012 Quarter included 130,000t of oxide ore at 1.0g/t gold, 1,878,573t of transition and primary ore at 1.2g/t gold and 8,858,557t of waste. The 13% increase in mine production relative to the June 2012 Quarter was the result of improved weather conditions during the September 2012 Quarter.

Ore stockpiles (including both high and low grade ore but not mineralised waste) increased to 4,358,374 tonnes grading 0.8 g/t and included approximately 62% oxide ore and 38% transitional/primary ore. Stockpiles at the end of the September 2012 Quarter were significantly larger and of higher grade than forecast due to overall positive reconciliation and lower mill throughput rates.

Total mill throughput for the September 2012 Quarter was 1,283,195 tonnes of ore and gold recovery rates of 87.7% were achieved. During the September 2012 Quarter, average operating mill throughput rates had increased to 761dtph from 734 dtph in the prior quarter. Based on the long term target utilisation rate of 90% the throughput rate in the September 2012 Quarter equated to about 6.0Mtpa, or 0.5Mtpa above the 5.5Mtpa nameplate capacity of the mill.

Parameter	Unit	SeptemberQuarter2012	JuneQuarter2012	MarchQuarter2012	DecemberQuarter2011	SeptemberQuarter2011
Total material mined	bcm	4,119,664	3,660,000	4,760,000	3,680,000	2,873,000
Waste to Ore Strip Ratio	bcm:bcm	4.7	3.8	4.2	3.3	4.5
Ore mined
Oxide	tonnes	130,004	173,000	908,000	779,000	584,000
Primary	tonnes	1,878,573	1,905,000	1,294,000	1,016000	648,000
Ore Grade mined
Oxide	g/t Au1	1.0	0.9	1.0	1.1	1.0
Primary	g/t Au	1.2	1.3	1.3	1.0	1.0
Ore Stockpiles
Quantity	tonnes	4,358,374	3,632,000	2,703,000	1,669,000	1,028,000
Grade	g/t Au	0.8	0.8	0.8	0.8	0.8
Mill throughput	tonnes	1,283,195	1,149,000	1,028,000	1,087,000	424,000
Milled head grade	g/t Au	1.5	1.6	1.4	1.3	1.0
Gold recovery	%	87.7	87.4	83.7	81.0	77.5
Gold produced	oz	52,610	52,670	38,796	35,801	10,031

1. Denotes grams/tonne of gold

During the Quarter a total of 259 hours of crusher production was lost due to two shutdowns linked to the same unusual event. In mid-July the primary crusher head nut came loose and damage was sustained to both the nut and shaft sleeve. The head nut was replaced with a spare, however it first had to be modified t to fit. It is suspected that an incorrectly sized nut was supplied by the vendor. The shaft sleeve had to be repaired and returned to service. The crusher was nursed through to early September when the modified nut failed, and a new nut, new sleeve and upper and lower mantle liners were installed. A review is in progress with the assistance of the vendor to ensure supply and support issues are addressed and that this type of event does not re-occur.

During these events the Company was able to complete a mill discharge reline in July and bring forward a feed end reline during the September event. An opportunity to complete a shell reline at the same time as the feed end reline was missed due to the late arrival of liner bolts. The bolts were subsequently airfreighted by the supplier and the shell reline was effected later in the month at the cost of an additional 70 hours mill downtime.

Since the replacement of the mantle and mill liners, both the crusher and mill have set new seven-day production records of 155,714 wet tonnes and 144,019 dry tonnes respectively.

Other unplanned shutdowns to address mechanical maintenance or wear issues have reduced significantly during recent months largely demonstrating the effectiveness of the preventative maintenance program.

The table below shows the improvement in the number of days of key mill throughput and production targets being met and days lost to unplanned events over the last six months.

Month			Days of mill throughput exceeding:	Gold Produced
	17.5kt/d1	19kt/d	20kt/d	dayslost2	kt/davg.3	averageoz/day4	days+700oz5
April	9	1	0	1	14.0	626	13
May	8	1	0	1	14.4	601	11
June	1	0	0	3	11.5	505	4
July	5	2	1	6	15.8	650	9
August	12	7	2	0	15.7	628	13
September	11	7	1	5	16.0	688	17
October	23	23	14	0	18.2	726	22

Table 2: Key Daily Mill Performance Improvement Indicators

Notes:

• 1. kt/d denotes thousand dry tonnes per day
• 1. days below 10% mill utilisation
• 1. average daily throughput excluding days below 10% mill utilisation
• 1. average ounces produced for days in excess of 10% mill utilisation
• 1. days in which more than 700 ounces of gold recovered

In the September 2012 Quarter, 50,785 oz were sold at a weighted average price of US$1,461/oz including 30,000 oz of gold into forward sales contracts at an average of US$1,225/oz with the balance sold at spot prices.

Perseus has a total outstanding hedge commitment, as at 30 September 2012, of 230,000 oz of gold to be delivered at an average gold price of US$1,365/oz in quarterly instalments up to and including December 2015 as a result of the debt restructure (see the Corporate Section of this report).

The cash cost for the Quarter of US$475/oz compared very favourably to guidance of US$575/oz and to the comparable cost in the June 2012 Quarter. A significant factor in the cash costs being so low relative to guidance and past performance was the material adjustment of US$18.0M to gross cash costs of US$817/oz. This adjustment is largely the result of a movement in the value of the ROM low grade ore stockpile caused by three factors including a significant increase in tonnage of low grade (+34% or 764,899t), the increase in the contained gold in the low grade ore (+45%), and the increases in gold price (+11%). (Note: the low grade ore stockpile is valued on the basis of net realisable value rather than cost of production, whilst the high grade ore stockpile is valued at cost of mining.)

It should also be noted that the increase in the gross cash costs relative to the June 2012 Quarter can be attributed to a 7% increase in unit mining costs for the period, a 4% increase in the unit processing costs reflecting the expensing of materials plus the use of additional cranes and tools to deal with the mechanical issues associated with the primary crusher; and a increase of 21% in general and administrative (G&A) costs related to several 'one off' items.

A total of US$6.1M of capital was expensed during the Quarter including US$1.3M on tailings dam modifications, US$1.8M on construction of a new haul road to the site of the soon to be developed Fetish open pit, and US$1.0M on community relations.

Parameter	Units	September2012Quarter	June2012Quarter	March2012Quarter	December2011Quarter1	September2011Quarter1
Total gold salesAverage sales price	ozUS$/oz of gold sold	50,7851,463	53,2791,504	45,4901,513	n/an/a	n/an/a
Gross Cash CostsIncluding:	US$/oz	817	716	975	n/a	n/a
Mining cost	US$/tonne of material mined	2.89	2.70	2.59	n/a	n/a
Processing cost	US$/tonne of ore milled	9.70	9.30	8.63	n/a	n/a
G & A cost	US$M / month	1.71	1.41	1.20	n/a	n/a
Accounting Adjustment	US$M	(18.0)	(2.1)	(9.8)	n/a	n/a
Adjusted Cash Costs	US$/oz	475	676	723	n/a	n/a
Royalties	US$/oz	94	106	107	n/a	n/a
Adjusted Cash Costsincluding royalties	US$/oz	569	782	830	n/a	n/a
Sustaining capital andplant upgrade costs	US$M	6.1	11.4	8.8	n/a	n/a

Table 3: Key Financial Operating Statistics – EGM

1. Note that Commercial Production was declared on January 1, 2012. Prior to this date all revenue and costs were capitalised on the balance sheet. Since January 1, 2012, all revenue and costs have been recorded in the Income Statement.

Guidance for December 2012 Quarter production is 65,000oz to 70,000oz at a cash cost of $700/oz before accounting adjustments or $575/oz after accounting adjustments for stockpile movements and excess waste movement, and remains unchanged. Combined March 2013 and June 2013 Quarter production guidance is 127,000oz to 143,000oz at a cash cost of $670/oz before accounting adjustments or $625/oz after accounting adjustments but before royalties, leaving the Company's guidance for the full twelve month period unchanged at 245,000 to 265, 000 ounces at a cash cost of US$600 / ounce.

Exploration

The Company completed 5,115 meters of drilling at the EGM (13,447 metres in June 2012 Quarter) and adjoining licenses during the September 2012 Quarter. Activity focused on core drilling several prospects to obtain more detailed geological information aimed at improving understanding of the nature of and controls on mineralisation in the different deposit styles in the district.

Hole DDD018 at Dadieso was significant as it intercepted a granitoid intrusive over a 20m interval. The hole returned 32.5m at 3.5g/t from 39.6m and 11.1m at 1.5g/t Au from 82.7m. Re-logging of diamond drill core and RC cuttings from a number of deposits is continuing as part of a broader review of EGM geology and mineralisation controls.

Significant core drilling results from the Dadieso deposit included:

DDD011	- 8.0m at 2.9g/t from 103.1m, 4.8m at 4.7g/t from 135.2m, 3.7m at 1.9g/t from 171.5m, 3.6m at2.1g/t from 204.6m and 6.9m at 1.8g/t Au from 215.6m
DDD012	- 2.5m at 2.2g/t from 28m, 4.6m at 1.0g/t from 32.9m, 4.6m at 2.2g/t from 91.5m and 18.6m at1.7g/t Au from 139.1m.
DDD014	- 7.5m at 2.9g/t from 101m, 4m at 1.4g/t from 116m, 1.5m at 3.8g/t from 144.5m and 1.1m at50.0g/t Au from 155.5m.
DDD018	- 32.5m at 3.5g/t from 39.6m and 11.1m at 1.5g/t Au from 82.7m.
DDD020	- 9.1m @ 1.8g/t from 2.5m, 18.6m @ 1.8g/t from 23m and 19.1m @ 2.8g/t Au from 52.9m

Significant core drilling results from the Nkonya prospect included:

• NKDD005 16.3m @ 1.2g/t Au from 98.7m
• NKDD010 12.8m @ 2.9g/t from 9.3m, 8.9m @ 2.5g/t from 33.2m and 4.9m @ 1.2g/t Au from 151.2m

Details of the intercepts are tabled in the exploration update released on 9 October 2012.

The Company's Measured and Indicated Mineral Resource base at EGM is now 5.6Moz of gold and the Inferred Mineral Resource base is 1.7Moz before adjustment for mining depletion and is tabulated below in Tables 4 and 5. The Company's Proven and Probable Ore Reserves are as shown in Table 6.

Table 4: Measured and Indicated Mineral Resources – EGM

		Measured Resources1			Indicated Resources1			Measured + IndicatedResources
Deposit	Quantity	Grade	Gold	Quantity	Grade	Gold	Quantity	Grade	Gold
	Mt	g/tgold	Ounces	Mt	g/tgold	Ounces	Mt	g/tgold	Ounces
Abnabna/AFGap/Fobinso	49.4	1.2	1,850,000	23.2	0.9	666,000	72.6	1.1	2,515,000
Esuajah South	8.3	1.8	482,000	6.2	1.7	336,000	14.5	1.8	818,000
Esuajah North	17.2	0.9	498,000	15.4	0.8	422,000	32.7	0.9	920,000
Fetish	8.8	0.9	255,000	20.6	1.1	717,000	29.4	1.0	972,000
Chirawewa		-	-	- 4.5	1.1	167,000	4.5	1.1	167,000
Bokitsi		-	-	- 2.6	2.5	212,000	2.6	2.5	212,000
Mampong		-	-	-	-	-	-	-	--
Dadieso		-	-	-	-	-	-	-	--
Total	83.7	1.1	3,085,000	72.5	1.1	2,520,000	156.3	1.1	5,604,000

1 Last updated in March 2012 and does not allow for mining depletion.

Table 5: Inferred Mineral Resources – EGM

		Inferred Resources1
Deposit	Quantity	Grade	Gold
	Mt	g/tgold	Ounces
Abnabna/AF Gap/Fobinso	11.1	1.0	362,000
Esuajah South	5.3	1.3	224,000
Esuajah North	6.3	0.8	168,000
Fetish	7.5	1.0	248,000
Chirawewa	8.7	0.9	249,000
Bokitsi	1.6	1.7	89,000
Mampong	6.9	0.9	210,000
Dadieso	3.2	1.6	161,000
Total	50.6	1.1	1,711,000

Table 6: Ore Reserves – EGM

	Proven Ore Reserves1			Probable Ore Reserves1			Proven & Probable OreReserves
Deposit	QuantityMt	Gradeg/tgold	Gold'000oz	QuantityMt	Gradeg/tgold	Gold'000oz	QuantityMt	Gradeg/tgold	Gold'000oz	W:O2Ratio
Abnabna-Fobinso	37.3		1.2 1,397	11.7	0.8	320	49.0	1.1	1,717	2.9
Esuajah South	7.2	1.8	422	1.0	2.1	71		8.2 1.9	493	9.0
Esuajah North	12.7	0.9	376	4.4	0.9	125	17.1	0.9	502	1.9
Fetish	7.4	0.9	222	8.4	1.3	354	15.9	1.1	576	3.4
ROM Stockpiles				3.6	0.8	90		3.6 0.8	90	-
Total	64.6		1.2 2,417	29.2	1.0	961	93.8	1.1	3,378	3.4

Notes:

1 0.4g/t gold cut-off applied to Abnabna-Fobinso and 0.5g/t gold cut-off applied to other deposits.

2 Inferred Mineral Resources totalling 1.41Mt at 1.2g/t gold is considered as waste.

3 Last updated in August 2012 and allows for material mined to June 30, 2012.

SGP, Côte d'Ivoire

The SGP is situated within an 885sq km exploration tenement area located in the north of Côte d'Ivoire that is being explored as part of the Tengrela Gold Exploration Project. The tenements are located along the same structural/stratigraphic corridor within the Syama-Boundiali greenstone belt. The SGP lies approximately 150km south-southeast of the Morila gold mine (7Moz) in Mali and 65km west northwest of Randgold's Tongon deposit (4.3Moz) in Côte d'Ivoire. The Company's Ore Reserves at the SGP are as shown in Table 7 below

Table 7: Ore Reserves – SGP

	Proved Reserves				Probable Reserves		Proved & ProbableReserves
Ore type	QuantityMt	Gradeg/tgold	Gold'000oz	QuantityMt	Gradeg/tgold	Gold'000oz	QuantityMt	Gradeg/tgold	Gold'000oz
Oxide/Transition	-	-	-	3.4	2.1	224	3.4	2.1	224
Primary	-	-	-	6.3	2.1	433	6.3	2.1	433
Total	-	-	-	9.7	2.1	657	9.7	2.1	657

Notes:

1. Reserve estimated by Coffey Mining using a pit design based on a US$950/oz gold price optimisation.

2. All Measured and Indicated Mineral Resources in pit designs designated as Probable Ore Reserves, Inferred Mineral Resources considered as waste.

3. A mining dilution of 5% was applied at a grade of 0.0g/t. In addition, a mining ore loss of 3% was assumed.

4. The Probable Ore Reserve as estimated in the DFS was estimated at a 0.55g/t gold cut-off.

Permitting and Fiscal Arrangements

On August 8, 2012, the government of Côte d'Ivoire announced the grant of an Exploitation Permit ("EP") to a subsidiary of the Company (Occidental Gold SARL or "Occidental") for the development of its Sissingué gold deposit, part of the Tengrela Gold Project, in northern Côte d'Ivoire. A draft Mining Convention lodged by the Company in June 2012 containing potential fiscal terms under which the Sissingué Gold Mine could be developed and operated is still under consideration by the Government.

The Ivorian government has conducted a review of the tax regime that it wished to apply to its bourgeoning gold industry and on September 14, 2012 made a public statement concerning the possible introduction of a "super profits tax". Subsequent to the end of the Quarter, the Minister for Mines and Energy met with participants in the Ivorian gold industry, including Perseus, to explain details of the possible tax and to receive feedback from the mining companies. It is expected that further consultation with companies involved in the gold industry in Côte d'Ivoire will occur before enabling legislation for the new tax is introduced to the Parliament for consideration.

Clarification of fiscal terms applicable to the SGP by the government in Côte d'Ivoire is one of the few remaining prerequisites for the full scale development of the project subject to Board approval.

Project Approval & Funding

As a precursor to seeking Board approval to proceed with the development of the SGP, the Company has undertaken a comprehensive review of operating and capital cost assumptions made in preparing the DFS of the project in October 2010, and where appropriate updated the cost estimates to take account of changes in scope of the project (taking into account its recent experience of starting up a new gold mine in Ghana) and cost inflation. Proposed changes to capital and operating cost budgets are relatively moderate given reported levels of industry inflation, and will be fully disclosed along with updated project economics once they have been reviewed and approved by the Perseus Board.

Given the Company's existing cash balance and undrawn line of credit, plus the cash flow expected to be generated by the EGM in the next 18 months, the task of funding the slightly increased capital development budget is well within the Company's capability without the need to access any additional sources of funds. Furthermore, the upsizing and restructuring of the Company's debt facility has provided an additional funding buffer to cover unforeseen increases to the Sissingué capital cost.

Plant Design and Procurement

An Australian engineering firm, GR Engineering Services, in conjunction with the Perseus's Projects Team, has completed the process portion of the Sissingué plant design and about 95% of the total detailed design. Letters of intent have been issued for major equipment and tender packages for fabrication and construction works are being prepared. Sixty percent of the SAG mill supply contract value has been invoiced and paid in accordance with the achievement of milestones set out in the contract with Outotec Pty Ltd. Delivery of the SAG mill's components commenced in the September 2012 Quarter and the majority of the SAG mill's components are currently in store in Abidjan pending delivery to the Sissingué mine site.

Early Site Works

Limited "early works" commenced on site in September 2012 in preparation for the commencement of full scale development later this calendar year. In particular, the process of assessing compensation due to landowners for loss of crops and land commenced and orders have been placed for the supply of prefabricated accommodation units. Limited earthworks, including the grading of roads is scheduled to commence as soon as compensation has been advanced and clarity obtained on proposed changes to the Ivorian fiscal regime.

Mine Design

The Company is currently in the process of updating its Mineral Resource model taking into account the drill results achieved since the last Mineral Resource update in November 2010. Once this is completed mine plan optimisation will commence enabling an updated Mineral Resource to be published early in the March 2013 Quarter.

COMPANY OUTLOOK FOR THE QUARTER ENDING DECEMBER 31, 2012

Based on current work schedules for the Quarter ending December 31, 2012 the Company plans to:

Edikan Gold Mine

• Target gold production of 65-70,000oz at cash cost of US$575/oz after accounting adjustments;
• Implement measures to improve mining efficiency;
• Progressively de-bottleneck the processing plant to increase throughput rates;
• Improve crusher and mill availability rates to 90%;
• Continue active exploration drilling.

Sissingué Gold Project

• Discuss and agree fiscal terms with the Ivorian government
• Complete detailed plant design
• Commit to full scale development
• Continue exploration drilling at Sissingué and other TGP targets;

Business Development

Continue to manage the preparation of an environmental impact statement relating to the development of a satellite gold mining and heap leach operation based on the Kayeya deposit which forms part of the GGP;

Continue to investigate opportunities for expanding the Company's inventory of Mineral Resources and Ore Reserves by identifying, investigating and, where appropriate, acquiring tenement holdings in West Africa through direct application to government authorities, joint venture activities or acquisition from existing holders.

OVERALL FINANCIAL PERFORMANCE OF THE COMPANY

The financial performance of the Company will be affected by the operation of the EGM and development and future operation of the SGP and GGP as well as ongoing exploration and evaluation activities being conducted on its properties. The financial performance of the Company is closely linked to the gold price following the commencement of commercial production at the EGM and, potentially, the SGP and GGP. The gold price also affects the economic viability of the Company's other projects and prospects. To protect against changes in gold price the Company has entered a number of hedging contracts, including put options and forward sales contracts which are discussed in further detail below under "Financial Instruments and Related Risks".

The Company reports its financial results in Australian dollars (AUD or $). However, the Company's costs and funding are currently incurred and sourced in several currencies including AUD, United States dollars (USD), Canadian dollars (CAD), Ghanaian Cedis, and CFA francs. Furthermore, for the EGM or any of the Company's other projects that commence commercial production, metals sales revenue will be denominated in USD. Fluctuations in the rates of exchange between the AUD and the currencies in which the Company transacts business may therefore significantly affect the results of operations of the Company and are discussed further below under "Financial Instruments and Related Risks".

The exploration, evaluation, development and operation of the Company's properties may require substantial additional financing. Failure to obtain sufficient financing in the future may result in delay or indefinite postponement of the exploration, evaluation, development or operation of any or all of the Company's properties. There can be no assurance that bank financing, equity capital or other types of financing will be available when needed or that, if available, the terms of such financing will be acceptable to the Company. See ''Risk Factors'' for a further discussion of these and other risk factors associated with the Company and an investment in the Company's shares.

DISCUSSION OF OPERATING RESULTS

The operating results for the eight most recent quarters are as follows:

Operating Results1for the threemonths ended	Sep 302012	Jun 302012	Mar 312012	Dec 312011	Sept 302011	Jun 302011	Mar 312011	Dec 312010
Total income	75.187	84.553	60.960	7.549	3.067	0.315	0.581	0.739
Net profit / (loss) after tax	17.388	19.053	19.722	12.907	0.779	(5.097)	(3.653)	(30.083)
Basic profit / (loss) per share (cents)	3.20	3.01	4.41	2.96	0.18	(1.38)	(0.73)	(7.07)

1All amounts shown above are in millions of Australian dollars except as otherwise indicated

The operating results for the September 2012 Quarter included revenue earned from the sale of precious metals (September 2012 Quarter: $75.104 million; September 2011 Quarter: $3.067 million) less the cost of the goods sold (September 2012 Quarter: $29.089 million; September 2011 Quarter: nil). The decrease in total income, from $84.553 million at the June 2012 Quarter to $75.187 million at the September 2012 Quarter, is as a result of a foreign exchange gain of $6.080 million being included as other income in the June 2012 Quarter while the foreign exchange loss of $5.869 million was classified as other expenses in the September 2012 Quarter in accordance with accounting policy. Furthermore, adding to the decrease in revenue in the September 2012 Quarter relative to the June 2012 Quarter was a reduction in gold sales (September 2012 Quarter: 50,785 oz; June 2012 Quarter: 53,279 oz) at lower average sales prices (September 2012 Quarter: US$1,463/oz of gold sold; June 2012 Quarter: US$1,504/oz of gold sold).

In addition, the result includes interest income (September 2012 Quarter: $0.084 million; September 2011 Quarter: $0.240 million), depreciation and amortisation (September 2012 Quarter: $5.267 million; September 2011 Quarter: $0.063 million), administration and corporate overheads (September 2012 Quarter: $3.701 million; September 2011 Quarter: $2.840 million). In the September 2012 Quarter a foreign exchange loss ($5.870 million) was incurred (September 2011 Quarter: gain of $2.828 million) that arose from an appreciation of the AUD relative to the USD during the period (September 30, 2012: 1.0381; June 30, 2012: 1.0161).

DISCUSSION OF FINANCIAL CONDITION

The quarter-on-quarter movements in the financial position of the Company over the last eight quarters are shown below.

Financial Position1as at:	Sep 30	Jun 30	Mar 31	Dec 31	Sept 30	Jun 30	Mar 31	Dec 31
	2012	2012	2012	2011	2011	2011	2011	2010
Cash and cash equivalents	108.758	105.497	117.120	131.455	53.561	96.462	68.038	88.796
Total Assets	561.896	528.971	531.544	507.721	407.739	382.598	312.433	300.718
Total Liabilities	220.325	169.103	201.204	196.120	207.815	170.213	82.481	64,755
Net Assets	341.571	359.868	330.340	311.601	199.924	212.385	229.951	235.963

1All amounts shown are in millions of dollars

Total Assets

Total assets have increased in the September 2012 Quarter by $32.925 million (June 2012 Quarter decrease of $2.573). The September Quarter increase is due to an increase in current assets of $18.050 million and an increase in non-current assets of $14.875 million. Details of movements in specific accounts follow.

Cash and cash equivalents

At September 30, 2012, the Company had available cash or cash equivalent resources of $108.758 million plus a further $8.641 million of restricted funds on deposit securing environmental obligations. This cash balance represents an increase relative to the position as at June 30, 2012 ($105.497 million plus restricted cash of $2.212 million). The increase in cash reserves of $3.261 million during the three month period ended September 30, 2012 is due to the sale of gold and silver during the period, offset by payments associated with the development and operation of the EGM, development at SGP, purchase of other fixed assets payments for exploration and administration activities plus payment for bank guarantee issued to the Ghana Environmental Protection Agency in relation to environmental rehabilitation provisions concerning the EGM.

The net increase in cash reserves of $3.261 million during the September 2012 Quarter is discussed in some detail in the "Discussion on Cash flows*"*.

Receivables

At September 30, 2012 the Company's current receivables were $9.520 million (June 30, 2012: 10.507 million) while non-current receivables amounted to $36.848 million (June 30, 2012: 29.563 million).

The decrease in current receivables during the three months to September 30, 2012 relative to prior periods is as a result of the timing of gold sales and the receipt of the debtor payments while the increase in non-current receivables in this period is due to an increase in a VAT refund from the Ghana Revenue Authority. The overall increase in receivables during this period is the result of an increase in the VAT refund due from the Ghana Internal Revenue Service.

Inventory

At September 30, 2012 the Company held inventories of $50.747 million (June 30, 2012: $37.335 million). The net increase in inventory during the September 2012 Quarter ($13.412 million) relative to the position at June 30, 2012, is the result of a write up of low grade stockpiles to net realisable value and an increase in low grade ore stockpiles, gold in circuit, bullion on hand and materials and supplies on hand.

Property, plant and equipment

At September 30, 2012, the Company recognised on its balance sheet a total of $167.383 million for property, plant and equipment ("PP&E") (June 30, 2012: $162.044 million).

The Company capitalised $9.490 million of expenditure on PP&E during the September 2012 Quarter before expensing depreciation of $2.059 million. Due to the devaluation of the USD against AUD referred to above, a $2.092 million foreign exchange loss was recorded against PP&E during the September 2012 Quarter as the majority of these assets are recorded in USD in the subsidiary companies' accounts and are translated into AUD on consolidation.

Mine Properties

At September 30, 2012 the Company recognised mine properties of $124.690 million on its Balance Sheet (June 30, 2012: $125.732). During the September 2012 Quarter, $4.661 million of expenditure on Mine Properties ($4.531 million of which relates to a deferred waste accounting entry) has been capitalised and $3.207 million of amortisation has been expensed. In addition, the net devaluation of the USD against AUD during the period referred to above gave rise to $2.496 million foreign exchange loss being recorded against mine properties.

Exploration and evaluation expenditure

At September 30, 2012 the Company recognised mineral interest acquisition and exploration expenditure of $32.708 million on its Balance Sheet (June 30, 2012: $29.125 million). The year on year movement in capitalised exploration and evaluation expenditure reflects the extensive exploration programmes conducted by the Company in recent years.

The Company capitalised $2.598 million of exploration and evaluation expenditure incurred on its Ghanaian and Ivorian exploration tenements during the September 2012 Quarter ($2.907 million in the three month period from March 31, 2012) before recording a foreign exchange loss of $0.563 million in the September 2012 Quarter and a $1.548 million reclassification of receivables relating to the advances made to SOMICI SARL for exploration on the Tengrela South tenement (where the Company has agreed to fund exploration to feasibility stage) to exploration and evaluation.

Other assets

At September 30, 2012 the Company recognised prepayments of $7.986 million on its balance sheet (June 30, 2012: $5.618 million). The increase in prepayments during the three months ended June 30, 2012 reflects the increased commercial activity associated with the EGM.

Total Liabilities

As at September 30, 2012, the Company had liabilities totalling $220.325 million compared to $169.103 million at June 30, 2012 and $201.204 million at March 31, 2012. In the three month period since June 30, 2012 the changes in total liabilities are attributable to increases in current liabilities of $34.314 million and an increase in non-current liabilities of $16.908 million. Details of movements in specific accounts follow.

Payables

During, the three months ending September 30, 2012 amounts owed to creditors, relating mainly to the operation of the EGM, increased to $42.451 million from a total outstanding at June 30, 2012 of $31.732 million and at March 31, 2012 of $38.300 million.

On a quarter on quarter basis, creditors at September 30, 2012 are $10.719 million more than at the end of the June 2012 Quarter. The increase relative to the June 2012 Quarter reflected a slight increase in the volume of creditors and also an administrative delay in the timing of payments of outstanding invoices in the September 2012 Quarter.

Provision

A provision of $6.728 million as at September 30, 2012 for future rehabilitation work relating mainly to both old and new mining activity at EGM, was $0.137 million lower than the amount provided for at June 30, 2012 of $6.865 million (March 30, 2012: $6.667 million). The change during the three month period ended September 30, 2012 reflects a devaluation of the USD against the AUD during the period, as highlighted above.

Derivative financial instruments

As at September 30, 2012 the Company held forward sales contracts for 230,000 ounces of gold and recorded a liability of $95.030 million (June 30 2012: 190,000 ounces of gold with a recorded liability of $67.123 million; March 31 2012: 210,000 ounces of gold with a recorded liability of $86.883 million) on its balance sheet. The movement in mark-tomarket value has been recorded as equity while $43.285 million (June 30, 2012: $32.836 million; March 31, 2012: $37.079 million) of the liability has been classified as a current liability as these forward contracts settle within twelve months of balance date; the balance of $51.745 million (June 30, 2012: $34.287 million; March 31, 2012: $49.803 million) has been classified as a non-current liability. The liability in each case reflects the difference in value of the hedge contracts on the respective balance dates relative to the value of the contracts on the date of inception of hedge accounting.

Borrowings

The decrease in total borrowings at September 30, 2012 ($59.176 million) relative to June 30, 2012 ($60.264 million) and March 31, 2012 ($69.354 million) is largely the result of a decrease in the AUD equivalent value of the outstanding USD denominated borrowings due to the appreciation of the AUD against the USD during the September 2012 Quarter as described above.

DISCUSSION ON CASHFLOWS

Cash flows1forthree months ended	Sept 302012	Jun 302012	Mar 312012	Dec 312011	Sept 302011	Jun 302011	Mar 312011	Dec 312010
Operating activities	25.675	21.641	25.163	(1.829)	(1.908)	(1.622)	(1.977)	(1.131)
Investing activities	(19.745)	(23.446)	(26.206)	(6.857)	(46.579)	(52.249)	(19.108)	(40.328)
Financing activities		- (10.664)	(8.240)	85.010	2.343	81.689	0.789	1.997

The eight most recent quarter-on-quarter movements in the cash flow of the Company are as shown below.

1All amounts shown are in millions of dollars

After considering the effects of foreign exchange movements, the Company's cash balance increased by $3.261 million during the September 2012 Quarter while in the corresponding period in 2011 cash decreased by $42.901 million.

Operating activities, during the September 2012 Quarter, resulted in total cash receipts of $68.982 million (June 2012 Quarter: $82.899 million) from the sale of precious metals produced at the EGM and $0.102 million (June 2012 Quarter:$0.189 million) from bank interest that were offset by administration expenses and production expenses at EGM of $42.798 million (June 2012 Quarter: $59.758 million) and borrowing costs of $0.611 million, giving a net cash inflow for Operating Activities during the period of $25.675 million (June 2012 Quarter: $21.641 million). This net cash inflow was $27.583 million more than the corresponding amount in September Quarter in 2011 when net outflows associated with Operating Activities totalled $1.908 million. In the September 2011 Quarter, the EGM had not commenced commercial production and therefore precious metal sales along with the associated operating costs were being capitalised to development. Interest received in the September 2011 Quarter was $0.14 million and the costs of administration activities were $2.048 million.

Investing activities during the September 2012 Quarter included development expenses at EGM and SGP of $9.854 million (June 2012 Quarter: $15.765 million), payments for exploration activities in Ghana and Cote d'Ivoire of $3.105 million (June 2012 Quarter: $7.126 million), investment in fixed assets of $0.276 million (June 2012 Quarter: $0.995 million), advances to third parties of nil (June 2012 Quarter: $0.536 million) and a payment for a bank guarantee, that generated a net cash outflow of $19.745 million (June 2012 Quarter: $23.446 million). In the corresponding quarter in 2011, investing activities included development of EGM ($46.333 million), exploration associated with the EGM and TGP ($1.976 million), investment in fixed assets ($1.349 million), advances to third parties ($0.084 million), financing costs ($0.884 million) offset by funds received for security deposits and bank guarantees, and resulted in a net cash outflow associated with investing activities of $46.579 million

Financing activities in the September 2012 Quarter gave rise to a net cash outflow of nil (June 2012 Quarter: $10.664 million). During the June 2012 Quarter, the second scheduled debt repayment of US$11.0 million to lenders of the project debt facility occurred giving rise to a payment of $10.664 million. By contrast during the September 2011 Quarter, $2.343 million of cash was generated by the exercising of options to acquire ordinary shares in the Company. No other financing activities occurred during this period.

LIQUIDITY AND CAPITAL RESOURCES

As at September 30, 2012, the Company's cash and cash equivalents amounted to $108.758 million (June 30, 2012 $105.497 million; September 30, 2011: $53.561).

The Company does not currently have a working capital deficiency. The Company has sufficient amounts of cash and cash equivalents in the short term to maintain capacity, meet its planned growth and fund development activities. As previously stated, the Company's short to medium term plans include the progressive expansion of the processing capacity of the EGM processing facility, permitting and development of the SGP, expansion of the Company's mineral resources through rapid exploration of existing ground, and the acquisition of prospective new projects, all of which require significant levels of funding. The Company's ability to generate sufficient amounts of cash and cash equivalents in the long term (if required) to maintain capacity, meet planned growth and fund development of activities depends on its ability to generate sufficient cash from the EGM and failing that, to raise additional funds from the debt or capital markets.

The Company's liquidity is expected to fluctuate with production from the EGM and the price of gold. The Company's ability to raise funds from the debt or capital markets will be affected by, among other things, global economic conditions (including the price of gold). As described in detail below, the Company's liquidity will also be negatively affected in the event there is a breach of the Facility Agreement (as defined below) which is not waived and upon which the lenders demand repayment of the outstanding balance of the project loan facility which at September 30, 2012 amounted to US$63 million (30 June 2012: US$63 million; 31 March 2012: US$74 million; June 30, 2011: US$85 million). In such event, the Company would seek replacement financing and to the extent it was unsuccessful, it would use existing cash and cash equivalents to satisfy the demand. Such a sequence of events could potentially cause development of the SGP to be delayed as existing cash and cash equivalents are planned to be used to partially fund the SGP development. To the extent sufficient funds could not be accessed to repay the project loan facility, the lenders would be entitled to realize on their security interest in the EGM.

For a description of the balance sheet conditions or income or cash flow that may affect liquidity, please see the section below under "Commitments".

During the last three financial years, both the debt and equity capital markets have been used as sources of funding by the Company. As discussed above, the Company completed a 28.75 million share fundraising during the December 2011 Quarter. The Company also received nil during the September 2012 Quarter (Nil in the June 2012 Quarter; $2.401 million in the March 2012 Quarter; $0.752 million in the December 2011 Quarter; $2.343 million in the September 2011 Quarter; $1.478 million in the June 2011 Quarter; $9.230 million during the June 2011 Full Year) from the exercise of options to purchase ordinary shares in the Company pursuant to its Share Option Plan. During the June 2011 quarter, the Company drew $80.211 million under its project debt facility. There can be no assurance however that the Company will be successful in raising additional funds, as and when required, from the debt or capital markets in the future. See "Risk Factors".

The project debt facility agreement (the "Facility Agreement") contains covenants and imposes restrictions on the Company's ability to complete certain transactions. For example, the Facility Agreement requires that the Company maintain certain financial ratios and prohibits the Company from incurring additional indebtedness or entering into hedging arrangements beyond that specifically permitted. The Facility Agreement also contains (i) certain conditions precedent to the drawing down of funds, which were either satisfied or waived, and (ii) certain conditions subsequent, some of which remain outstanding. The Company has previously received waivers of breaches of, and extensions for satisfaction of, non-financial conditions to the Facility Agreement. In particular, the Company has received waivers in respect of breaches of, and extensions to the time required for satisfaction of, the conditions subsequent that: (i) the Company enter into a term sheet in respect of a power supply agreement for the Edikan Gold Mine on or before December 31, 2011 (as extended); (ii) the Company use its best endeavours to complete a reorganization of its subsidiaries by December 31, 2011 (as extended); (iii) the Company grants additional security in favour of the lenders by December 31, 2011 (as extended) in the event the reorganization has not been completed by then; (iv) there is parliamentary ratification of the Edikan mining leases and stability agreement by December 31, 2011 (as extended); (v) the Company execute a foreign exchange retention account agreement with the Republic of Ghana, the Bank of Ghana, the lenders and a financial institution in Ghana by December 31 2011 (as extended). While the Company is currently in compliance with the terms of the Facility Agreement and believes it will be able to satisfy the foregoing conditions subsequent in the prescribed time, it may require one or more waivers or extensions from the lenders in the future. A breach by the Company of certain provisions of the Facility Agreement, unless waived, will constitute an event of default, entitling the lenders to accelerate the payment of amounts due there under. The project loan is effectively secured by all (or substantially all) of the Company's interest in the Edikan Gold Mine. An obligation to repay the amount owing under the project loan before its stated maturity could have an adverse effect on the Company and its financial position.

Subsequent to the end of the September 2012 Quarter, the Company executed a Deed of Amendment and Restatement (the "Amending Deed") which documented amendments to the Facility Agreement that had the effect of converting the project debt facility into a revolving line of credit. In addition, the Amending Deed provides for an increase in the facility limit to US$100 million, with the availability limit decreasing over time to zero as at December 28 2015. The facility margin has been revised to 4.0 percent per annum and the Commitment fee has been reduced to 1.75 percent per annum. Permitted uses of funds drawn under the facility have been amended to allow for repayment of intercompany loans owed by Perseus Mining (Ghana) Limited to Perseus.

As at September 30, 2012 a total of 230,000 ounces of gold (June 30, 2012: 190,000 ounces of gold) had been hedged under gold forward sale contracts for settlement from December 2012 to December 2015 at an average sale price of US$1,365 per ounce. The inception of this hedging was initially a pre-requisite for Perseus to be able to draw the full US$85 million debt facility in the June 2011 quarter. A total of 70,000 ounces of gold has been delivered under forward sales contracts up to and including September 30 2012 and following the successful restructure, extension and up-sizing of the debt facility, a further total of 70,000 ounces of gold was sold forward, restoring the outstanding balance of gold hedging to 230,000 ounces of gold. This hedging represents approximately 20% of expected production from EGM to the end of 2015 and approximately 6% of current Ore Reserves estimate at EGM. In addition, options granting Perseus the right but not the obligation to sell 62,500 ounces of gold at US$850 per ounce in the period from July 2012 to December 2013 were purchased as part of the Company's financial risk management strategy.

As at the date of this MD&A the Company had no material commitments for future capital expenditure over and above those that arise in the normal course of business. In future quarters, subject to achieving satisfactory progress on the permitting of the SGP, commitments for capital expenditure associated with the development of the SGP, whose cost is currently estimated as US$145 million, (including US$30 million associated with the construction of an HV power line which will not be completed at the time of commencement of commercial production) may be incurred. As noted above, the Company intends to use its existing cash reserves to partly fund the development of the SGP. The balance of the capital required to meet future commitments associated with the development of the SGP will be drawn from cash expected to be generated from the EGM operation. There are no known trends or expected fluctuations that are expected to change the mix of funds used for this purpose.

COMMITMENTS

The following table sets forth information regarding the Company's contractual obligations as at September 30, 2012. The Company has no long term debt, finance lease obligations, operating leases or purchase obligations except as indicated below.

Year	1 - 3 Years	4 - 5 Years	After 5 years
0.750	0.700	0.700	0.950
35.000	19.000		--
0.368	0.702	0.702	-
36.118	20.402	1.402	0.950
		Less than 1

Notes:

(1) The Company's mineral rights in Ghana and Côte d'Ivoire are subject to nominal statutory expenditure commitments on exploration activities and its mineral lease fees are paid annually, in advance.

(2) Represents repayments of the project loan facility which were scheduled (prior to the amendment of the terms of the project loan facility subsequent to the end of the September 2012 Quarter) to occur on or about the end of each ensuing quarter, with the final payment due on 30 September 2014. (Refer to section on "Liquidity and Capital Resources" for details of amendments to the terms of the facility subsequent to September 30, 2012)

FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS

The principal financial instruments used by the Company as at September 30, 2012 are cash, receivables, payables and prepayments. As a result of the use of these financial instruments, the Company is exposed to credit risk, liquidity risk and market risk.

Credit Risk

Credit risk represents the loss that would be recognised if counterparties failed to perform as contracted under a financial instrument resulting in a financial loss to the Company and arises from deposits with banks and financial institutions, favourable derivative financial instruments as well as credit exposures to customers including outstanding receivables and committed transactions. There has been no significant change in the Company's exposure to credit risk or its objectives and policies for managing these risks during the September 2012 Quarter.

Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company's approach to managing liquidity is to ensure, that as far as possible, it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation.

The Company manages liquidity risk by maintaining adequate cash reserves by continuously monitoring forecast and actual cash flows, matching maturity profiles of financial assets and financial liabilities, and by ensuring that surplus funds are generally only invested in instruments that are tradable in highly liquid markets or that can be relinquished with minimal risk of loss.

Market Risk

The Company is exposed to commodity price risk for its future gold production. These risks are measured using sensitivity analysis and cash flow forecasting and to manage exposures the Company enters into forward commodity price derivatives, details of which are discussed in "Liquidity and Capital Resources" above.

The Company operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US dollar. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the entity's functional currency. The risk is measured using sensitivity analysis and cash flow forecasting. The Company is also exposed to foreign exchange risk arising from the translation of its foreign operations, the Company's investments in its subsidiaries are not hedged as those currency positions are considered to be long term in nature. There has been no significant change in the Company's exposure to currency risk or its objectives and policies for managing these risks during September 2012

Quarter. The Company's main interest rate risk arises from long-term borrowing through its project loan facility which is based on three month LIBOR. Borrowings issued at variable rates expose the Company to cash flow interest rate risk. During the September 2012 Quarter the Company's borrowings at variable rate were denominated in US dollars. The Company has not entered into any hedge/interest rate swap instruments to manage interest rate risk exposure. There has not been a change in the Company's exposure to interest rate risk during the September 2012 Quarter compared to the June 2012 Quarter. The Company's objectives and policies for managing these risks have not changed during the June 2012 Quarter.

OFF BALANCE SHEET ARRANGEMENTS

There are no off-balance sheet arrangements as at September 30, 2012.

TRANSACTIONS WITH RELATED PARTIES

Remuneration (including salaries, directors' fees and the issue of share options) was paid or is payable to the directors of the Company in the normal course of business. The Company pays its non-executive directors consulting fees for extra services, if any, performed outside of normally expected non-executive duties. These transactions are made on commercial terms and conditions and at market rates.

Accounting, secretarial and corporate service fees paid or payable to Corporate Consultants Pty Ltd, a company in which the company secretary, Mr Susmit Shah, has a beneficial interest, totalled $62,000 during the September 30, 2012 Quarter compared to $43,988 in the corresponding Quarter ending September 30, 2011.

The Company has no ongoing contractual or other commitments arising from transactions with any of the related parties referred to above.

CRITICAL ACCOUNTING ESTIMATES

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including the expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.

The Company makes estimates and assumptions concerning the future. The resulting accounting will, by definition, seldom equal the actual results. Each critical accounting estimate is discussed below.

(i) Exploration and evaluation expenditure

In accordance with accounting policy note 1(n) in the June 2012 Financial Report, management determines when an area of interest should be abandoned. When a decision is made that an area of interest is not commercially viable, all costs that have been capitalised in respect of that area of interest are written off. In determining this, assumptions, including the maintenance of title, ongoing expenditure and prospectivity are made.

(ii) Impairment of assets

In accordance with accounting policy note 1(g) in the June 2012 Financial Report, in determining whether the recoverable amount of each cash generating unit is the higher of fair value less costs to sell or value-in-use against which asset impairment is to be considered, the Company undertakes future cash flow calculations which are based on a number of critical estimates and assumptions including, for its assets under construction, forward estimates of:

• a) Mine life including quantities of ore reserves and mineral resources for which there is a high degree of confidence of economic extraction with given technology;
• b) Estimated production and sales levels;
• c) Estimated future commodity prices;
• d) Future costs of production;
• e) Future capital expenditure;
• f) Future exchange rates; and/or
• g) Discount rates applicable to the cash generating unit.

Variations to expected future cash flows, and timing thereof, could result in significant changes to the impairment test results, which in turn could impact future financial results.

(iii) Share-based payment transactions

The Company measures the cost of equity-settled transactions with employees and directors by reference to the fair value of the equity instruments as at the date at which they are granted. The Company measures the cost of cash-settled share-based payments at fair value at the grant date using the Black-Scholes option pricing model and taking into account the terms and conditions upon which the instruments were granted. Differences in estimated future stock price volatility, interest rates and other factors can have a material effect on the calculation of share-based compensation expense and derivative values. As such, the values derived may change significantly from period to period and are subject to significant uncertainty. The Company recorded a total share-based compensation expense of nil for the Quarter ended September 30, 2012 ($(0.429) million for the Quarter ended June 30, 2012 as a result of options lapsing due to vesting conditions not being met and $1.528 million for the twelve months ended June 30, 2012).

The share based payment expense for the Quarter ended September 30, 2012 was nil compared to $0.661 million for the September 2011 Quarter.

(iv) Restoration and rehabilitation provisions

As set out in accounting policy note 1(t) in the June 2012 Financial Report, the value of the current restoration and rehabilitation provision is based on a number of assumptions including the nature of restoration activities required and the valuation at the present value of a future obligation that necessitates estimates of the cost of performing the work required, the timing of future cash flows and the appropriate discount rate. Additionally current provisions are based on the assumption that no significant changes will occur in either relevant Federal or State/Prefect legislation covering restoration of mineral properties. A change in any, or a combination, of these assumptions used to determine current provisions could have a material impact to the carrying value of the provision.

(v) Derivative financial instruments

The Company makes judgements on the effectiveness of all derivative financial instrument entered into, including forward metal contracts, metal options and foreign currency option contracts in accordance with accounting policy note 1(l) in the June 2012 Financial Report. Management's assessment is that, unless otherwise disclosed the derivatives have been highly effective in offsetting changes in the fair value of the future cash flows against which they have been designated and as such are compliant with the hedge effectiveness requirements of AASB 139.

(vi) Taxes

Judgement is required in determining whether deferred tax assets are recognised on the statement of financial position. Deferred tax assets, including those arising from un-utilised tax losses, require management to assess the likelihood that the Company will generate taxable earnings in future periods, in order to utilise recognised deferred tax assets. Estimates of future taxable income are based on forecast cash flows from operations and the application of existing tax laws in each jurisdiction. To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the Company to realise the net deferred tax assets recorded at the reporting date could be impacted.

Additionally, future changes in tax laws in jurisdictions in which the Company operates could limit the ability of the Company to obtain tax deductions in future periods.

(vii) Commercial production

The Company assesses the stage of each mine under construction to determine when a mine moves into the production stage being when the mine is substantially complete and ready for its intended use. The criteria used to assess the start date are determined based on the unique nature of each mine construction project, such as the complexity of a plant and its location. The Company considers various relevant criteria to assess when the production phase is considered to commence and all related amounts are reclassified from 'Mines under construction' to 'Mine properties' and 'Property, plant and equipment'. Some of the criteria used will include but are not limited to, the following:

• a) Level of capital expenditure incurred compared to the original construction cost estimates;
• b) Completion of a reasonable period of testing of the mine plant and equipment;
• c) Ability to produce metal in saleable form (within specifications); and
• d) Ability to sustain ongoing production of metal.

When a mine development / construction project moves into the production stage, the capitalisation of certain mine development / construction costs ceases and costs are either regarded as forming part of the cost of inventory or expensed, except for costs that qualify for capitalisation relating to mining asset additions or improvements, underground mine development or mineable reserve development. It is also at this point that depreciation / amortisation commences.

(viii) Unit-of-production method of depreciation / amortisation

The Company uses the unit-of-production basis when depreciating/amortising life of mine specific assets, which results in a depreciation/amortisation charge proportional to the depletion of the anticipated remaining life of mine production. Each item's economic life, which is assessed annually, has due regard to both its physical life limitations and to present assessments of economically recoverable reserves of the mine property at which it is located. These calculations require the use of estimates and assumptions.

(ix) Deferred stripping expenditure

The Company defers advanced stripping costs incurred during the production stage of its operations. This calculation requires the use of judgements and estimates such as estimates of tonnes of waste to be removed over the life of the mining area and economically recoverable reserves extracted as a result. Changes in a mine's life and design will usually result in changes to the expected stripping ratio (waste to ore reserves ratio). Changes in other technical or economical parameters that impact reserves will also have an impact on the life of mine ratio even if they do not affect the mine's design. Changes to the life of mine are accounted for prospectively.

(x) Inventory

Net realisable value tests are performed at least annually and represent the estimated future sales price of the product based in prevailing spot metals prices at the reporting date, less estimated costs to complete production and bring the product to sale. Stockpiles are measured by estimating the number of tonnes added and removed from the stockpile, the number of contained gold ounces based on assay data, and the estimated recovery percentage based on expected processing method. Stockpile tonnages are verified by periodic surveys.

(xi) Reserves and resources

Ore reserves are estimates of the amount of ore that can be economically and legally extracted from the Company's mining properties. The Company estimates its ore reserves and mineral resources based on information compiled by appropriately qualified persons relating to the geological data on the size, depth and shape of the ore body and this requires complex geological judgements to interpret data. The estimation of recoverable reserves is based upon factors such as estimates of foreign exchange rates, commodity prices, future capital requirements, and production costs along with geological assumptions and judgements made in estimating the size and grade of the ore body. Changes in the reserve or resource estimates may impact upon the carrying value of exploration and evaluation assets, mine properties, property, plant and equipment, goodwill, provision for rehabilitation, recognition of deferred assets, and depreciation and amortisation charges.

CHANGES IN ACCOUNTING POLICIES INCLUDING INITIAL ADOPTION

In the September 2012 Quarter, the Company reviewed all of the new and revised Standards and Interpretations issued by the AASB that are relevant to its operations and effective for annual reporting periods beginning on or after 1 July 2012. All of the new standards and amendments to standards that are mandatory for the first time for the financial year beginning 1 July 2012 were adopted and they did not have any impact on the current period or any prior period, and is not likely to affect future periods.

OUTSTANDING SECURITIES DATA

At September 30, 2012 the Company had issued 457,962,088 shares (June 30, 2012: 457,962,088 shares; September 30 2011: 426,717,088) and 3,730,000 options (June 30, 2012: 4,470,000; September 30, 2011: 7,265,000).

The following is a summary of the Company's capital structure as at the date of this MD&A:

Ordinary shares	457,962,088
Options over unissued shares	2,970,000

Since June 30, 2012 and up to the date of this MD&A, the Company has not issued any shares. No new options have been issued since September 30, 2012 and up to the date of this MD&A.

CONTROLS AND PROCEDURES

The Company maintains appropriate information systems, procedures and controls to ensure that information used internally and disclosed externally is complete and reliable. The Company continues to review and develop internal controls, including disclosure controls and procedures for financial reporting that are appropriate for the nature and size of the Company's business.

Disclosure Controls and Procedures

The Company's disclosure controls and procedures ("DCP") are designed to provide reasonable assurance that all relevant information relating to the Company is communicated to the Company's senior management and information required to be disclosed in its annual filings, interim filings and other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the specified time period. Access to material information regarding the Company is facilitated by the small size of the Company's senior management team and workforce. The Company is continuing to develop appropriate DCP for the nature and size of the Company's business.

As at September 30, 2012, the Chief Executive Officer and Chief Financial Officer, with participation of the Company's management, concluded that there were no material weaknesses in the design of DCP at that date or changes to the Company's DCP during the September 2012 Quarter which have materially affected, or are considered to be reasonably likely to materially affect, the Company's disclosure or its DCP.

Internal Controls over Financial Reporting

Internal controls over financial reporting ("ICFR") are designed to provide reasonable assurance regarding the reliability of the Company's financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. The Board is responsible for ensuring that management fulfils its responsibilities in this regard. The Audit Committee is in turn responsible for ensuring the integrity of the reported information through its review of the Company's interim and annual financial statements. There has been no change in the Company's ICFR during the September 2012 Quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. As at September 30, 2012, the Chief Executive Officer and Chief Financial Officer, have concluded that there is no material weakness relating to the design of the Company's ICFR.

Limitations of Controls and Procedures

The Company's management, including the Chief Executive Officer and Chief Financial Officer, believe that any DCP or ICFR, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, they cannot provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been prevented or detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion between two or more people, or by unauthorized override of the control. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Accordingly, because of the inherent limitations in a cost effective control system, misstatements due to error or fraud may occur and not be detected.

The Company's Chief Executive Officer and Chief Financial Officer have not limited the scope of their design of DCP and ICFR to exclude controls, policies and procedures of any proportionately consolidated entity, variable interest entity or business acquired within the preceding 12 months.

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

This MD&A contains "forward-looking information" within the meaning of applicable Canadian securities laws. This forward-looking information may include but is not limited to information with respect to the Company's plans respect the EGM and the TGP, the estimation of ore reserves and mineral resources, realization of ore reserve and resource estimates, the timing and amount of future production, costs of production, capital expenditures, costs and timing of development of the TGP, mine life projections, the ability to secure required permits, the results of future exploration and drilling, the adequacy of financial resources and business and acquisition strategies. Often, this information includes words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate" or "believes" or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved.

Forward-looking information is based on assumptions, estimates, analysis and opinions of management made in light of its experience and its perception of trends, current conditions and expected developments, as well as other factors that management of the Company believes to be relevant and reasonable in the circumstances at the date that such statements are made, but which may prove to be incorrect. Assumptions have been made by the Company regarding, among other things: the price of gold, continuing commercial production at the Edikan Gold Mine without any material disruption, the receipt of required governmental approvals, the accuracy of capital and operating cost estimates, the

ability of the Company to operate in a safe, efficient and effective manner and the ability of the Company to obtain financing as and when required and on reasonable terms. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which may have been used by the Company. Although management believes that the assumptions made by the Company and the expectations represented by such information are reasonable, there can be no assurance that the forward-looking information will prove to be accurate.

By its nature, forward-looking information is based on assumptions and involves known and unknown risks, uncertainties and other factors that may cause the Company's actual results, performance or achievements, or results, to be materially different from future results, performance or achievements expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include among other things the risks set out below under the heading "Risk Factors".

Although Perseus has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. Also, many of the factors are beyond the Company's control. Accordingly, readers should not place undue reliance on forward-looking information. Perseus undertakes no obligation to reissue or update forwardlooking information as a result of new information or events after the date of this MD&A, except in accordance with applicable securities laws. All forward-looking information disclosed in this document is qualified by this cautionary statement.

RISK FACTORS

Some of the risks and other factors that could cause actual results to differ materially from those expressed in the forward-looking information contained in this MD&A, as well as risk factors generally facing the Company, include, but are not limited to:

• risks related to the Company's compliance with restrictions and covenants in the Facility Agreement;
• risks associated with the price of gold;
• risks related to potential development of the TGP;
• risks related to capital cost increases at the TGP;
• risks related to operating and capital cost increases at the EGM;
• risks related to the availability of additional financings as and when required;
• the risk of unrest and political instability in West Africa;
• risks related to the periodic renewal of the Company's various exploration and exploitation permits;
• risks related to global economic conditions;
• risks and uncertainties relating to the interpretation of drill results, the geology, grade and continuity of mineral deposits and conclusions of economic evaluations;
• risks related to negative operating costs flow;
• results of initial feasibility, pre-feasibility and feasibility studies, and the possibility that future exploration, development or mining results will not be consistent with the Company's expectations;
• risks relating to possible variations in reserves, grade, planned mining dilution and ore loss, or recovery rates and changes in project parameters as plans continue to be refined;
• mining and operating risks, including risks related to accidents, equipment breakdowns, labour disputes (including work stoppages and strikes) or other unanticipated difficulties with or interruptions in exploration and development;
• the potential for delays in exploration or development activities or the completion of feasibility studies;
• risks related to the inherent uncertainty of production and cost estimates and the potential for unexpected costs and expenses;
• risks related to interest rate and foreign exchange rate fluctuations;
• the uncertainty of profitability based upon the cyclical nature of the industry in which the Company operates;
• the risk of changes to fiscal terms or operating approval conditions;
• risks related to environmental regulation and liability; and
• other risks and uncertainties related to the Company's prospects, properties and business strategy.

A detailed discussion of these and other factors that may affect the Company's prospects, actual results, performance, achievements or financial position is contained in the Company's Annual Information Form dated September 30, 2011.

TECHNICAL DISCLOSURES

The information in this report that relates to exploration results, mineral resources or ore reserves is based on information compiled by Mr Mark Calderwood, who is a Chartered Professional Member of The Australasian Institute of Mining and Metallurgy. Mr Calderwood is a Director and full-time employee of the Company. Mr Calderwood has sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking, to qualify as a Competent Person as defined in the 2004 Edition of the "Australasian

Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves" and to qualify as a "Qualified Person" under National Instrument 43-101 – Standards of Disclosure for Mineral Projects ("NI 43-101"). Mr Calderwood consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.

Mr Calderwood verified the data disclosed, including sampling, analytical and test data underlying the information contained herein. For a description of Perseus' data verification process, quality assurance program and quality control measure applied, the type of analytical or testing procedures utilized, sample size, name and location of testing laboratories, the effective date of the mineral resource and ore reserve estimates contained herein, details of the key assumptions, parameters and methods used to estimate the mineral resources and ore reserves set out in this report any known environmental, political, legal, title, or other risks that could materially affect the potential development of the mineral resources or ore reserves, readers are directed to the technical report entitled "Technical Report - Central Ashanti Gold Project, Ghana" dated May 30, 2011 and the technical report entitled ''Technical Report - Tengrela Gold Project, Côte d'Ivoire'' dated December 22, 2010 in relation to the Edikan Gold Mine (formerly Central Ashanti Gold Project) and the Tengrela Gold Project respectively.