PERSEUS MINING LIMITED — Interim / Quarterly Report 2013

Nov 11, 2012

PERSEUS MINING LIMITED ABN 27 106 808 986

Consolidated Interim Financial Statements For the three months ended 30 September 2012 (unaudited)

The accompanying unaudited consolidated interim financial statements for the three months ended 30 September 2012 have been prepared by management and approved by the Audit Committee on behalf of the Board of Directors of the company. The company’s auditors have not reviewed these financial statements. Readers are cautioned that these financial statements contain forward-looking information as described in the associated Management’s Discussion & Analysis. All amounts are stated in Australian dollars, except as otherwise stated.

Perseus Mining Limited and its controlled entities Unaudited consolidated statement of comprehensive income For the period ended 30 September 2012

		Consolidated	Consolidated
		Three months ended
	Notes	30 Sept 2012	30 Sept 2011
		$	$
Revenue		75,103,751		-
Other income	4	83,712		858,576
Changes in inventories of finished goods and work in progress		12,761,531		-
Direct costs of mining and processing		(38,122,988)		-
Movement in deferred waste		4,531,374		-
Royalties		(4,770,160)		-
Employee benefits expense		(4,923,106)	(1,556,020)
Depreciation and amortisation expense		(5,266,825)		(62,889)
Foreign exchange gains / (losses)		(5,869,938)		2,827,719
Finance costs		(800,296)		-
Loss on derivative financial instruments		(53,594)		(133,798)
Other expenses		(1,412,919)	(1,150,034)
Profit before income tax expense		31,260,542		783,554
Income tax expense		(13,872,849)		(4,845)
Net profit after tax expense		17,387,693		778,709
Other comprehensive loss
Exchange differences on translation of foreign operations		(1,478,125)	12,823,002
Net changes in fair value of cash flow hedges		(35,559,858)	(29,481,527)
Income tax relating to components of other comprehensive loss		1,353,064		-
Total comprehensive loss for the period		(18,297,226)	(15,879,816)
Profit attributable to:
Owners of the parent		14,811,535		807,720
Non-controlling interests		2,576,158		(29,011)
		17,387,693		778,709
Total comprehensive loss attributable to:
Owners of the parent		(17,412,283)	(12,644,415)
Non-controlling interests		(884,943)	(3,235,401)
		(18,297,226)	(15,879,816)
Basic profit per share		3.20 cents	0.18 cents
Diluted profit per share		3.20 cents	0.18 cents

The accompanying notes form part of these financial statements.

2

Perseus Mining Limited and its controlled entities Unaudited consolidated statement of financial position As at 30 September 2012

		CONSOLIDATED	CONSOLIDATED
	Notes	30 Sept 2012	30 June 2012
		$	$
Current Assets
Cash and cash equivalents	6	108,757,598	105,496,585
Receivables	7	9,520,011	10,507,416
Inventories	8	50,747,325	37,334,846
Other assets	9	7,986,130	5,621,573
Total current assets		177,011,064	158,960,420
Non-current assets
Receivables	7	36,848,106	29,563,428
Other assets	9	1,132	35,629
Deferred tax asset		11,833,678	12,089,893
Investments accounted for using the equity method	10	11,420,668	11,420,668
Property, plant and equipment		167,383,218	162,043,648
Mine properties		124,690,175	125,732,030
Mineral interest acquisition and exploration expenditure		32,707,870	29,124,828
Total non-current assets		384,884,847	370,010,124
Total assets		561,895,911	528,970,544
Current liabilities
Payables		42,451,264	31,731,613
Derivative financial instruments	11	43,285,357	32,836,085
Income tax payable		16,940,073	3,118,510
Borrowings	12	33,981,061	34,657,400
Total current liabilities		136,657,755	102,343,608
Non-current liabilities
Provision		6,727,785	6,864,724
Derivative financial instruments	11	51,744,608	34,287,361
Borrowings	12	25,195,097	25,606,959
Total non-current liabilities		83,667,490	66,759,044
Total liabilities		220,325,245	169,102,652
Net assets		341,570,666	359,867,892
Equity
Issued capital	13	445,449,793	445,449,793
Reserves		(94,069,305)	(61,854,467)
Accumulated losses		(8,290,030)	(23,101,566)
Parent entity interest		343,090,458	360,493,760
Non-controlling interest		(1,519,792)	(625,868)
Total equity		341,570,666	359,867,892

The accompanying notes form part of these financial statements.

3

Perseus Mining Limited and its controlled entities Unaudited consolidated statement of changes in equity For the period ended 30 September 2012

CONSOLIDATED

Issued Capital	Accumulated Losses Share Based Payments Reserve	Foreign Currency Translation Reserve Hedging Reserve Non- controlling Interest’s Reserve Non- controlling Interest Total Equity
$	$ $	$ $ $ $ $
3 months to 30 September 2012 Balance at 1 July 2012 445,449,793 Profit for the period - Currency translation differences - Net change in the fair value of cash flow hedges - Income tax relating to components of other comprehensive income / (loss) -	(23,101,566) 18,449,409 14,811,535 - - - - - - -	(51,824,293) (28,697,164) 217,581 (625,868) 359,867,892 - - 2,576,158 17,387,693 (1,437,704) - (40,421) (1,478,125) - (30,458,640) - (5,101,218) (35,559,858) - (327,474) - 1,680,538 1,353,064
Total comprehensive income / (loss) for the period -	14,811,535 -	(1,437,704) (30,786,114) - (884,943) (18,297,226)
Shares issued during the period - Share issue expenses - Exercise of options - Fair value of options issued -	- - - - - - - 8,980	- - - - - - - - - - - - - - - - - - (8,980) -
Balance at 30 September 2012 445,449,793	(8,290,030) 18,458,389	(53,261,997) (59,483,278) 217,581 (1,519,792) 341,570,666
3 months to 30 September 2011 Balance at 1 July 2011 355,759,201 Profit for the period - Currency translation differences - Net change in the fair value of cash flow hedges -	(70,257,447) 16,242,006 807,720 - - - - -	(48,727,585) (34,250,890) 217,581 (6,598,046) 212,384,820 - - (29,011) 778,709 13,081,239 - (258,237) 12,823,002 - (26,533,374) - (2,948,153) (29,481,527)
Total comprehensive income / (loss) for the period -	807,720 -	13,081,239 (26,533,374) - (3,235,401) (15,879,816)
Share issue expenses - Exercise of options 2,343,000 Fair value of options issued -	- - - - - 1,004,834	- - - - - - - - - 2,343,000 - - - 70,767 1,075,601
Balance at 30 September 2011 358,102,201	(69,449,727) 17,246,840	(35,646,346) (60,784,264) 217,581 (9,762,680) 199,923,605

The accompanying notes form part of these financial statements.

4

Perseus Mining Limited and its controlled entities Unaudited consolidated statement of cash flows For the period ended 30 September 2012

		Consolidated	Consolidated
		Three months ended
	Notes	30 Sept 2012	30 Sept 2011
		$	$
Operating activities
Receipts in the course of operations		68,981,860	-
Payments to suppliers and employees		(42,797,509)	(2,047,967)
Interest received		101,830	140,291
Payments for borrowing costs		(611,560)	-
Net cash flows from / (used in) operating activities		25,674,621	(1,907,676)
Investingactivities
Payments for exploration and evaluation expenditure		(3,104,794)	(1,976,805)
Payments for acquisition of assets under construction		(9,854,204)	(46,333,238)
Receipts from gold sales capitalised to development		-	3,172,020
Payments for acquisition of property, plant and equipment		(275,839)	(1,349,078)
Payments for borrowing costs		-	(890,785)
Advances to third parties		-	(84,423)
Funds received / (payments) for security deposit and bank guarantee		(6,510,411)	883,681
Net cash flows used in investing activities		(19,745,248)	(46,578,628)
Financingactivities
Proceeds from exercise of options		-	2,343,000
Net cash flows from financing activities		-	2,343,000
Net increase / (decrease) in cash held		5,929,373	(46,143,304)
Cash and cash equivalents at the beginning of the financial period		105,496,585	96,462,044
Effects of exchange rate fluctuations on the balances of cash held in foreign currencies		(2,668,360)	3,242,342
Cash and cash equivalents at the end of the financial period	6	108,757,598	53,561,082

The accompanying notes form part of these financial statements.

5

Perseus Mining Limited and its controlled entities Notes to the unaudited consolidated financial statements For the period ended 30 September 2012

Contents of the notes to the financial statements

		Page
1	Summary of significant accounting policies	7
2	Critical accounting estimates and judgements	7
3	Segment information	10
4	Other income	12
5	Expenses	12
6	Cash and cash equivalents	12
7	Receivables	13
8	Inventories	13
9	Other assets	14
10	Investments accounted for using the equity method	15
11	Derivative financial instruments	16
12	Borrowings	16
13	Issued capital	17
14	Contingencies	18
15	Commitments	18
16	Events occurring after the end of the reporting period	19

6

Perseus Mining Limited and its controlled entities Notes to the unaudited consolidated financial statements For the period ended 30 September 2012

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies adopted in the preparation of these consolidated interim financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated. The interim financial statements are for the consolidated entity consisting of Perseus Mining Limited (“Perseus” or the “company”) and its subsidiaries (the “group” or the “consolidated entity”).

Basis of preparation

Perseus Mining Limited is a listed public company, incorporated and domiciled in Australia. During the three months ended 30 September 2012 (the “period”), the consolidated entity conducted operations in Australia, Ghana and Côte d'Ivoire.

These consolidated interim financial statements of the consolidated entity for the period ended 30 September 2012 are general purpose financial statements prepared in accordance with the requirements of the Australian Corporations Act 2001 (Cth) , applicable accounting standards including AASB 134 ‘Interim Financial Reporting’, other authoritative pronouncements of the Australian Accounting Standards Board (‘AASB’) and Urgent Issues Group Interpretations.

These condensed interim financial statements do not include full disclosures of the type normally included in an annual financial report. Therefore, it cannot be expected to provide as full an understanding of the financial performance, financial position and cash flows of the group as in the full financial report. It is recommended that these interim financial statements be read in conjunction with the annual financial report for the year ended 30 June 2012, and any public announcements made by the group during the periods in accordance with continuous disclosure requirements arising under the Corporations Act 2001.

The consolidated interim financial statements are presented in Australian dollars, which is Perseus Mining Limited’s functional and presentation currency.

The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting periods.

Compliance with IFRS

The consolidated financial statements of the group also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). Compliance with AASB 134 ensures compliance with IAS 34 ‘Interim Financial Reporting’.

New and amended standards adopted by the group

In the periods ended 30 September 2012, the group has 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. As a result of this review the Directors have determined that there is no change necessary to group accounting policies.

Historical cost convention

These consolidated interim financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets and liabilities (including derivative instruments) at fair value through profit or loss.

Critical accounting estimates

The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 2.

2. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

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 consolidated entity and that are believed to be reasonable under the circumstances.

The group makes estimates and assumptions concerning the future. The resulting accounting will, by definition, seldom equal the actual results. The estimates and assumptions that have a risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

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Perseus Mining Limited and its controlled entities Notes to the unaudited consolidated financial statements For the period ended 30 September 2012

2. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS – continued

(i) Exploration and evaluation expenditure

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 prospectively are made.

(ii) Impairment of assets 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 group 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:

• (i) Mine life including quantities of mineral reserves and resources for which there is a high degree of confidence of economic extraction with given technology;

• (ii) Estimated production and sales levels;

• (iii) Estimate future commodity prices;

• (iv) Future costs of production;

• (v) Future capital expenditure;

• (vi) Future exchange rates; and/or

• (vii) 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 consolidated entity measures the cost of equity-settled transactions with employees and consultants by reference to the fair value of the equity instruments at the date at which they were granted. The fair value of options granted is determined using a Black-Scholes model.

(iv) Restoration and rehabilitation provisions

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 relevant 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 group makes judgements on the effectiveness of all derivative financial instrument entered into, including forward metal contracts, metal options and foreign currency option contracts. 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. Further information on the group’s use of derivative financial instruments, including carrying values, is set out in note 11.

(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 unutilised tax losses, require management to assess the likelihood that the group 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 group 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 group operates could limit the ability of the group to obtain tax deductions in future periods.

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Perseus Mining Limited and its controlled entities Notes to the unaudited consolidated financial statements For the period ended 30 September 2012

2. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS – continued

(vii) Production start date

The group 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 group 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:

• (i) Level of capital expenditure incurred compared to the original construction cost estimates;

• (ii) Completion of a reasonable period of testing of the mine plant and equipment;

• (iii) Ability to produce metal in saleable form (within specifications); and

• (iv) 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 group 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, including the amount of recoverable reserves and estimates of future capital expenditure. The group amortises mine property assets utilising tonnes of ore mined and mine related plant and equipment over tonnes of ore processed.

(ix) Deferred stripping expenditure

The group 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 mineral 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 group’s mining properties. The group 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.

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Perseus Mining Limited and its controlled entities Notes to the unaudited consolidated financial statements For the period ended 30 September 2012

3. SEGMENT INFORMATION

(a) Description of segments

Management has determined the operating segments based on the reports reviewed by the executive management team and board of directors that are used to make strategic decisions.

The group primarily reports on a geographical basis as its risks and rates of return are affected predominantly by differences in geographical areas in which it operates and this is the format of the information provided to the executive management team and board of directors.

The group operated principally in three geographical segments during the period ended 30 September 2012 being Australia and the West African countries of Ghana and Côte d’Ivoire. The segment information is prepared in conformity with the group’s accounting policies.

The group comprises the following main segments:

Australia Investing activities and corporate management. Ghana Mining, mineral exploration, evaluation and development activities. Côte d’Ivoire Mineral exploration, evaluation and development activities.

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Perseus Mining Limited and its controlled entities Notes to the unaudited consolidated financial statements For the period ended 30 September 2012

3. SEGMENT INFORMATION – continued

(b) Segment information provided to the executive management team and board of directors

Total revenue Revenue Other income Reconciliation to total revenue and other income Results Operating profit / (loss) before income tax Income tax expense Net profit Included within segment results: Share of net profit / (loss) of associate accounted for using the equity method Depreciation and amortisation Loss on derivative financial instruments Revaluation / (devaluation) of gold put options Options issued to employees, directors and consultants Foreign exchange gain / (loss) Assets Segment assets Total assets includes: Investments in associates Additions to non-current assets (other than financial assets) Liabilities Segment liabilities	Three months ending Australia Australia Ghana Ghana Côte d’Ivoire Côte d’Ivoire 30 Sept 2012 30 Sept 2011 30 Sept 2012 30 Sept 2011 30 Sept 2012 30 Sept 2011 $ $ $ $ $ $	Consolidated Consolidated 30 Sept 2012 30 Sept 2011 $ $
	- - 75,103,751 - - - 75,115 841,658 8,597 16,918 - -	75,103,751 - 83,712 858,576
	75,115 841,658 75,112,348 16,918 - -	75,187,463 858,576
	(8,021,030) 1,457,564 39,479,929 (542,964) (198,357) (131,046)	31,260,542 783,554
	- - - - - - (241,181) (17,036) (5,010,553) (32,933) (15,091) (12,920) - - (53,594) (133,798) - - (45,638) 616,682 - 2,358 - - - (464,034) - (180,325) - (16,366) (5,451,821) 2,784,911 (413,781) 42,808 (4,336) - Three Months Twelve Months Three Months Twelve Months Three Months Twelve Months Ended Ended Ended Ended Ended Ended 30 Sept 2012 30 June 2012 30 Sept 2012 30 June 2012 30 Sept 2012 30 June 2012 86,752,936 98,644,008 434,941,229 393,137,294 40,201,746 37,189,242	(13,872,849) (4,845)
		17,387,693 778,709
		- - (5,266,825) (62,889) (53,594) (133,798) (45,638) 619,040 - (660,725) (5,869,938) 2,827,719 Three Months Twelve Months Ended Ended 30 Sept 2012 30 June 2012 561,895,911 528,970,544
	11,420,668 11,420,668 - - - - 34,041 6,108,191 13,467,723 39,975,900 3,765,076 13,979,259 1,733,554 2,264,213 217,441,625 165,555,545 1,150,066 1,282,894	11,420,668 11,420,668 17,266,840 60,063,350 220,325,245 169,102,652

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Perseus Mining Limited and its controlled entities Notes to the unaudited consolidated financial statements For the period ended 30 September 2012

Notes 54. OTHER INCOME Interest income Revaluation of gold put options 5. EXPENSES Profit from ordinary activities before income tax has been determined after: Interest and finance charges paid / payable Write up of low grade stockpiles to net realisable value Devaluation of gold put options 6. CASH AND CASH EQUIVALENTS Cash assets (i) Short term deposits (ii)	Consolidated Three months ended 30 Sept 2012 30 Sept 2011 $ $ 83,712 239,536 - 619,040
	83,712 858,576
	(800,296) - 5,254,959 - (45,638) - Consolidated 30 Sept 2012 30 June 2012 $ $ 4,996,178 6,067,978 103,761,420 99,428,607
	108,757,598 105,496,585

(i) Cash at bank earns interest at floating rates based on daily bank deposit rates.

(ii) Short-term deposits are made for varying periods, depending on the immediate cash requirements of the group, and earn interest at the respective short-term deposit rates.

Risk exposure

The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of cash and cash equivalents mentioned above.

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Perseus Mining Limited and its controlled entities Notes to the unaudited consolidated financial statements For the period ended 30 September 2012

7. RECEIVABLES Current Trade debtors (i) Sundry debtors (i) Non-current Other receivable (ii) Loans to external party (iii) Security deposits (iv)	Consolidated 30 Sept 2012 30 June 2012 $ $ 9,192,752 10,063,042 327,259 444,374
	9,520,011 10,507,416
	28,207,521 25,867,871 - 1,483,382 8,640,585 2,212,175
	36,848,106 29,563,428

Terms relating to the above financial instruments:

• (i) Trade and sundry debtors are non-interest bearing and generally on 30 day terms.

• (ii) Other receivable relates to a VAT refund from the Ghana Revenue Authority. The method of recovery of this receivable is currently under negotiation.

• (iii) The loan relates to advances made to SOMICI SARL for exploration on the Tengrela South tenement where the group has agreed to fund exploration to feasibility stage. These advances have been reclassified to exploration and evaluation.

• (iv) At 30 September 2012, the group has US$8.970 million (approximately A$8.641 million) held in bank deposits which are subject to a lien and is collateral for a bank guarantee that has been issued to the Ghana Environmental Protection Agency in relation to environmental rehabilitation provisions concerning the Edikan Gold Mine (“EGM”).

Fair value and foreign exchange and credit risk

Due to the short term nature of the current receivables, their carrying amount is assumed to approximate their fair value. Long term receivables are evaluated by the group based on parameters such as individual creditworthiness of the customer and specific country risk factors. The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of receivables mentioned above.

8. INVENTORIES

8. INVENTORIES
Ore stockpiles – at cost Ore stockpiles – at net realisable value Gold in circuit Bullion on hand Materials and supplies	Consolidated 30 Sept 2012 30 June 2012 $ $ 15,188,793 15,381,546 24,192,955 13,053,289 867,487 1,148,740 1,963,567 490,287 8,534,523 7,260,984
	50,747,325 37,334,846

Inventory expense

The inventory expense during the period ended 30 September 2012 was $29.3 million (30 June 2012: $71.2 million). The write up of inventories due to an increase in net realisable value recognised during the period ended 30 September 2012 amounted to $5.3 million (30 June 2012 write down: $11.6 million) and is included in ‘changes in inventories of finished goods and work in progress’ in the statement of comprehensive income.

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Perseus Mining Limited and its controlled entities Notes to the unaudited consolidated financial statements For the period ended 30 September 2012

9. OTHER ASSETS Current Prepayments Financial assets at fair value through profit or loss (i) Non-current Financial assets at fair value through profit or loss (i)	Consolidated 30 Sept 2012 30 June 2012 $ $ 7,985,992 5,618,204 138 3,369
	7,986,130 5,621,573
	1,132 35,629

(i) Terms and conditions relating to the above financial instruments:

On 26 August 2009, the group purchased a strip of Bullion Options pursuant to which the group has the right but not the obligation to sell a total of 100,000 ounces of gold to counterparties at a fixed price of US$850 per ounce in twenty four equal monthly amounts commencing on 27 January 2012 and ending on 27 December 2013. The put options were purchased for a consideration of US$9,140,000 (A$10,888,730).

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Perseus Mining Limited and its controlled entities Notes to the unaudited consolidated financial statements For the period ended 30 September 2012

10. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

			Ownership	interest	Published	fair value
		Country of	Sept 2012	June 2012	Sept 2012	June 2012
Name of associated entity:	Principal activity	incorporation	%	%	$	$
Manas Resources Limited	Gold Exploration	Australia	23.7	23.7	8,139,500	5,046,490
Burey Gold Limited	Gold Exploration	Australia	23.0	23.0	3,504,500	2,689,500

Manas Resources Limited (“Manas”)

On 30 September 2011 Perseus entered into a sub-underwriting agreement with respect to the shortfall of the exercise of options to subscribe for that number of shares which results in its shareholding interest in Manas remaining around its current holding. On 13 October 2011 Perseus subscribed for and was allotted 11,930,000 shares at a cost of $2,386,000 and, as a result of the 30 September 2011 exercise of options by Manas option holders, further shares were allotted and Perseus’s interest in Manas reduced from 23.9% to 23.7%.

Investment in associated entity – Manas Resources Limited

	Consolidated	Consolidated
30 Sept	2012	30 June 2012
$		$
7,830,602		7,830,602

Burey Gold Limited (“Burey”)

On 30 June 2011 Perseus exercised 34,800,000 options for a total consideration of $1,740,000 and its interest in Burey increased from 19.9% to 25.6%. As a result of the exercise of the options, Perseus was issued 34,800,000 ‘piggy-back’ options. In July 2011, and as a result of the 30 June 2011 exercise of options by Burey option holders, further shares were allotted and Perseus’s interest in Burey decreased to 23.0%.

The “piggy-back” options to acquire shares in Burey have the following terms:

Number of options	Exercise Price	Maturity Date
34,800,000	$0.08	31 December 2012

Investment in associated entity - Burey Gold Limited

			Consolidated	Consolidated
	30	Sept	2012	30 June 2012
		$		$
		3,590,066		3,590,066

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Perseus Mining Limited and its controlled entities Notes to the unaudited consolidated financial statements For the period ended 30 September 2012

11. DERIVATIVE FINANCIAL INSTRUMENTS

11. DERIVATIVE FINANCIAL INSTRUMENTS
Current Cash flow hedge liability Non-Current Cash flow hedge liability	Consolidated 30 Sept 2012 $ 30 June 2012 $ 43,285,357 32,836,085
	51,744,608 34,287,361

The group is party to derivative financial instruments in the normal course of business in order to hedge exposure to future price and currency fluctuations in the primary commodity markets in which it operates. This is done in accordance with the group's financial risk management policies

Forward metal contracts – cash flow hedges:

The group uses cash flow designated USD forward metal contracts to hedge movements in USD precious metal prices on its anticipated sales of gold. At 30 September 2012 there were cash flow designated hedge contracts in place for 230,000 ounces of gold with settlements scheduled between December 2012 and December 2015.

The portion of the gain or loss on these hedging instruments that are determined to be an effective hedge are recognised and retained directly in equity. The ineffective portion will be recognised in the statement of comprehensive income.

12. BORROWINGS

Current Interest-bearing loan facility (i) Non-Current Interest-bearing loan facility (i)	33,981,061 34,657,400
	25,195,097 25,606,959

• (i) This is a secured loan facility provided by Macquarie Bank Limited and Credit Suisse AG with fixed repayments, with the balance repayable by September 2014. The terms of this facility have been renegotiated to convert the facility into a revolving line of credit with a maximum commitment of USD100 million. An Amending Deed was executed on 12 October 2012, see note 16 for further details.

Secured liabilities and assets pledged as security

The debt and hedge facilities provided by Macquarie Bank Limited and Credit Suisse AG are secured by a guarantee and indemnity from the company covering all money due under the facilities as well as mortgages over certain of the company’s assets including its shares in Kojina Resources Ltd (“Kojina”) and receivables under intercompany loan arrangements with subsidiaries. In addition, the security package includes fixed and floating charges over all of the assets and undertakings of both Kojina and Perseus Mining (Ghana) Limited (“PMGL”) including a first ranking mortgage over the EGM tenements.

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Perseus Mining Limited and its controlled entities Notes to the unaudited consolidated financial statements For the period ended 30 September 2012

13. ISSUED CAPITAL

			Consolidated	Consolidated
	30	Sept	2012	30 Sept	2011
	$		Number	$	Number
Balance at the beginning of the period	445,449,793		457,962,088	355,759,201	425,617,088
Shares issuedpursuant to exercise of options		-	-	2,343,000	1,100,000
Balance at the end of the period	445,449,793		457,962,088	358,102,201	426,717,088

(b) Share Options

Options to subscribe for ordinary shares in the company have been granted as follows:

Exercise Period Note Exercise Price	Opening Balance 1 July 2012 Options Issued Options Exercised/ Cancelled/ Expired Closing Balance 30 Sept 2012 Number Number Number Number
On or before 16 June 2013 $2.13 On or before 29 July 2012 $2.45 On or before 6 October 2013 $3.00 On or before 14 October 2012 $3.00 On or before 14 October 2012 $3.45 On or before 3 November 2013 $3.20 On or before 15 June 2014 $3.00	820,000 - 40,000 780,000 400,000 - 400,000 - 450,000 - 200,000 250,000 160,000 - - 160,000 280,000 - - 280,000 270,000 - - 270,000 2,090,000 - 100,000 1,990,000
	4,470,000 - 740,000 3,730,000

(c) Ordinary shares

Ordinary shares entitle the holder to participate in dividends as declared and, in the event of winding up of the company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held. Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the company.

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Perseus Mining Limited and its controlled entities Notes to the unaudited consolidated financial statements For the period ended 30 September 2012

14. CONTINGENCIES

There were no known contingent liabilities which were not provided for in the financial statements of the group as at 30 September 2012.

15. COMMITMENTS

(a) Exploration expenditure commitments

With respect to the group’s mineral property interests in Ghana and Côte d’Ivoire, statutory expenditure commitments specified by the mining legislation are nominal in monetary terms. However, as part of mineral licence application and renewal requirements, the group submits budgeted exploration expenditure. In assessing subsequent renewal applications, the mining authorities review actual expenditure against budgets previously submitted. The group’s budget expenditures for future periods are shown below. These amounts do not become legal obligations of the group and actual expenditure may and does vary depending on the outcome of actual exploration programs, and the costs and results from those programs.

Within one year One year or later and not later than five years Later than five years	Consolidated 30 Sept 2012 30 June 2012 $ $ 750,000 750,000 1,400,000 1,400,000 950,000 950,000
	3,100,000 3,100,000

(b) Capital commitments

In March 2007, the company’s subsidiary, Kojina, exercised an option to purchase all of the issued capital of PMGL (formerly Central Ashanti Gold Ltd), a Ghanaian company which is the holder of the EGM. PMGL itself had acquired the EGM from the former owner, AngloGold Ashanti Limited (“AGC”). The group has assumed responsibility for all rehabilitation of the Edikan mining leases, which are currently estimated to cost approximately US$6.8 million and a provision has been recorded for this at balance date.

In December 2011, the company placed an order for the construction of the SAG mill for the Sissingué Gold Mine in Côte d’Ivoire. The commitments under this contract were for approximately A$3.3 million and EUR 1.8 million of which A$1.4 million and EUR 1.5 million has been spent to date.

(c) Operating lease commitments

The company leases office premises under normal commercial arrangements. The lease is for a period of 5 years beginning 1 April 2012. The company is under no legal obligation to renew the lease once the lease term has expired.

Future minimum lease payments payable under non-cancellable operating leases at 30 September 2012 are as follows:

Within one year One year or later and not later than five years Later than five years	Consolidated 30 Sept 2012 30 June 2012 $ $ 367,572 360,165 1,404,098 1,341,615 - -
	1,771,670 1,701,780

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Perseus Mining Limited and its controlled entities Notes to the unaudited consolidated financial statements For the period ended 30 September 2012

16. EVENTS OCCURING AFTER THE END OF THE REPORTING PERIOD

Since the end of the financial period and to the date of this report no matter or circumstance has arisen that has significantly affected, or may significantly affect, the operations of the consolidated entity, the results of those operations or the state of affairs of the consolidated entity in subsequent financial periods other than:

• a) The group’s Ghanaian subsidiary, PMGL, successfully renegotiated the terms of its existing US$85 million project debt facility with Credit Suisse AG and Macquarie Bank Limited in October 2012. The facility changed from a conventional project debt facility to a revolving line of credit. The size of the facility has increased from US$85 million to US$100 million with commitment limits that progressively reduce from US$100m in September 2013 to zero in December 2015. The company has flexibility to vary the amount drawn under the facility at its election, within commitment limits. A total of US$54 million is currently drawn down under the facility and the company has the ability to draw a further US$46 million as required. The undrawn line fee is LIBOR plus 1.75% while the margin above LIBOR on the drawn amount is 4.0%. The permitted uses of the facility have been expanded to include the repayment of intercompany loans made by Perseus to PMGL.

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