PERSEUS MINING LIMITED — Interim / Quarterly Report 2015

Nov 12, 2014

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PERSEUS MINING LIMITED ABN 27 106 808 986

Consolidated Interim Financial Statements

For the three months ended 30 September 2014 (unaudited)

The accompanying unaudited consolidated interim financial statements for the three months ended 30 September 2014 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 2014

Perseus Mining Limited and its controlled entities Unaudited consolidated statement of comprehensive income For the period ended 30 September 2014
Notes Revenue 4 Changes in inventories of finished goods and work in progress Contractors, consumables, utilities and reagents Royalties Employee benefits expense Depreciation and amortisation expense 4 Foreign exchange gains / (loss) 4 Finance costs 4 Share of net losses of associate 10 Gain recognised on discontinuation of equity accounting 10 Other expenses Profit before income tax expense Income tax expense 5 Net profit after income tax expense Other comprehensive income Items that may be reclassified subsequently to profit or loss Exchange differences on translation of foreign operations Net changes in fair value of cash flow hedges Net changes in fair value of available for sale financial assets Income tax (expense) / benefit relating to cash flow hedges Total comprehensive income / (loss) for the period Profit attributable to: Owners of the parent Non-controlling interests Total comprehensive income / (loss) attributable to: Owners of the parent Non-controlling interests Basic profit / (loss) per share Diluted profit / (loss) per share	Consolidated Three months ended 30 Sept 2014 30 Sept 2013 $’000 $’000
	71,702 71,988 (4,582) 16,403 (38,390) (50,984) (4,882) (4,611) (5,659) (6,803) (12,217) (10,337) 20,182 (4,787) (320) (580) (108) - 507 - (1,242) (1,755)
	24,991 8,534 (2,260) (5,680)
	22,731 2,854
	8,669 (1,351) 11,903 (19,342) (523) (488) (4,166) 6,770
	38,614 (11,557)
	22,330 1,895 401 959
	22,731 2,854
	37,021 (11,132) 1,593 (425)
	38,614 (11,557)
	4.24 cents 0.41 cents 4.18 cents 0.41 cents

The accompanying notes form part of these financial statements.

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Perseus Mining Limited and its controlled entities Unaudited consolidated statement of financial position As at 30 September 2014

Perseus Mining Limited and its controlled entities Unaudited consolidated statement of financial position As at 30 September 2014
Notes Current assets Cash and cash equivalents 6 Receivables 7 Inventories 8 Other assets 9 Derivative financial instruments 11 Total current assets Non-current assets Receivables 7 Inventories 8 Other assets 9 Investments accounted for using the equity method 10 Property, plant and equipment Mine properties Mineral interest acquisition and exploration expenditure Derivative financial instruments 11 Total non-current assets Total assets Current liabilities Trade and other payables Current tax Derivative financial instruments 11 Total current liabilities Non-current liabilities Provisions Deferred tax liability Total non-current liabilities Total liabilities Net assets Equity Issued capital 13 Reserves Retained earnings / (accumulated losses) Parent entity interest Non-controlling interest Total equity	Consolidated 30 Sept 2014 30 June 2014 $’000 $’000
	44,321 36,937 14,298 32,985 36,023 37,111 8,996 5,943 27,479 9,557
	131,117 122,533
	25,053 17,243 668 2,025 3,408 2,053 - 1,548 189,175 184,521 202,995 189,005 37,469 33,565 5,229 9,529
	463,997 439,489
	595,114 562,022
	38,328 53,077 2,291 - - 115
	40,619 53,192
	8,235 7,669 40,889 34,552
	49,124 42,221
	89,743 95,413
	505,371 466,609
	476,429 476,429 13,693 (1,110) 7,050 (15,280)
	497,172 460,039 8,199 6,570
	505,371 466,609

The accompanying notes form part of these financial statements.

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Perseus Mining Limited and its controlled entities Unaudited consolidated statement of changes in equity For the period ended 30 September 2014

CONSOLIDATED
Issued capital Retained earnings / (accumulated losses) Share based payments reserve Foreign currency translation reserve Asset revaluation reserve Cash flow hedge reserve Non- controlling interest’s reserve	Non- controlling interest Total equity
$’000 $’000 $’000 $’000 $’000 $’000 $’000	$’000 $’000
3 months to 30 September 2014 Balance at 1 July 2014 476,429 (15,280) 19,071 (33,739) 54 13,286 218 Profit for the period - 22,330 - - - - - Currency translation differences - - - 8,324 - - - Share of currency translation difference of associated entity - - - (73) - - - Net change in the fair value of financial assets - - - - (523) - - Net change in fair value of cash flow hedges - - - - - 10,713 - Income tax relatingto components of other comprehensive income - - - - - (3,750) -	6,570 466,609 401 22,731 418 8,742 - (73) - (523) 1,190 11,903 (416) (4,166)
Total comprehensive income for theperiod - 22,330 - 8,251 (523) 6,963 -	1,593 38,614
Shares issued during the period - - - - - - - Share issue expenses - - - - - - - Share basedpayments - - 112 - - - -	- - - - 36 148
Balance at 30 September 2014 476,429 7,050 19,183 (25,488) (469) 20,249 218	8,199 505,371
3 months to 30 September 2013 Balance at 1 July 2013 445,404 12,978 18,865 (31,736) (651) 24,631 218 Profit for the period - 1,895 - - - - - Currency translation differences - - - (1,224) - - - Share of currency translation difference of associated entity - - - - - - - Net change in the fair value of financial assets - - - - (488) - - Net change in fair value of cash flow hedges - - - - - (17,408) - Income tax relatingto components of other comprehensive loss - - - - - 6,093 -	8,776 478,485 959 2,854 (127) (1,351) - - - (488) (1,934) (19,342) 677 6,770
Total comprehensive loss for theperiod - 1,895 - (1,224) (488) (11,315) -	(425) (11,557)
Shares issued during the period - - - - - - - Share issue expenses - - - - - - - Share basedpayments - - 78 - - - -	- - - - (12) 66
Balance at 30 September 2013 445,404 14,873 18,943 (32,960) (1,139) (13,316) 218	8,339 466,994

The accompanying notes form part of these financial statements.

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Perseus Mining Limited and its controlled entities Unaudited consolidated statement of cash flows For the period ended 30 September 2014

Notes Operating activities Receipts in the course of operations Payments to suppliers and employees Interest received Payments for borrowing costs Net cash from operating activities Investing activities Payments for exploration and evaluation expenditure Payments for acquisition of property, plant and equipment Payments for mine properties Payments for acquisition of assets under construction Investment in listed entity Net cash used in investing activities Financing activities Proceeds from share issues Repayment of borrowings Share issue expenses Net cash from / (used in) financing activities Net increase / (decrease) in cash held Cash and cash equivalents at the beginning of the financial period Effects of exchange rate fluctuations on the balances of cash held in foreign currencies Cash and cash equivalents at the end of the financial period 6	Consolidated Three months ended 30 Sept 2014 30 Sept 2013 $’000 $’000
	73,026 73,522 (64,650) (72,073) 123 22 - (5)
	8,499 1,466
	(1,705) (3,189) (4) (140) (3,234) (1,798) (2,628) (6,956) (100) -
	(7,671) (12,083)
	- - - - - -
	- -
	828 (10,617) 36,937 35,480 6,556 (1,772)
	44,321 23,091

The accompanying notes form part of these financial statements.

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Perseus Mining Limited and its controlled entities Notes to the unaudited consolidated financial statements For the period ended 30 September 2014

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 / expenses and adjustments	12
5	Income tax expense	12
6	Cash and cash equivalents	12
7	Receivables	13
8	Inventories	14
9	Other assets	14
10	Investments accounted for using the equity method	15
11	Derivative financial instruments	16
12	Financial risk management	16
13	Issued capital	19
14	Contingencies	19
15	Commitments	20
16	Events occurring after the end of the reporting period	20

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Perseus Mining Limited and its controlled entities Notes to the unaudited consolidated financial statements For the period ended 30 September 2014

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 and its subsidiaries (the “group” or the “consolidated entity”). Perseus Mining Limited is a listed for-profit public company, incorporated and domiciled in Australia. During the three month period ended 30 September 2014, the consolidated entity conducted operations in Australia, Ghana and Côte d’Ivoire.

Basis of preparation

Perseus Mining Limited is a listed public company, incorporated and domiciled in Australia. During the three months ended 30 September 2014 (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 2014 are general purpose condensed financial statements prepared in accordance with the requirements of the Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board (AASB), Urgent Issues Group Interpretations, Australian Corporations Act 2001 (Cth) and AASB 134 ‘Interim Financial Reporting’.

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 2014, 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. These consolidated interim financial statements are rounded off to the nearest thousand dollars ($’000), unless otherwise indicated.

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

New and amended standards and interpretations adopted by the group

In the period ended 30 September 2014, the group has adopted 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 before 1 July 2014. The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the group’s annual consolidated financial statements for the year ended 30 June 2014.

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.

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 2014

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 forward estimates including:

• (i) Mine life including quantities of mineral ore 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 payments

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 and the fair value of performance rights granted is determined using a Monte Carlo simulation 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 instruments 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 2014

2. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS – continued

(vii) 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.

(viii) Deferred stripping expenditure

The group defers stripping costs incurred during the production stage of its operations. Significant judgement is required to distinguish between production stripping that relates to the extraction of inventory and what relates to the creation of a deferred waste asset.

The group also identifies the separate components of the ore body. An identifiable component is a specific volume of the ore body that is made more accessible by the stripping activity. Significant judgement is required to identify these components, and to determine the expected volumes of waste to be stripped and ore to be mined in each component. 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 component ratio even if they do not affect the mine’s design. Changes to the life of mine are accounted for prospectively.

(ix) Inventory

Net realisable value tests are performed at least quarterly 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 the expected processing method. Stockpile tonnages are verified by periodic surveys.

(x) 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.

(xi) Measurement of fair values

When the fair values of financial assets and financial liabilities recorded in the statement of financial position cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.

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Perseus Mining Limited and its controlled entities Notes to the unaudited consolidated financial statements For the period ended 30 September 2014

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 2014 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.

Revenue is derived from two external customers arising from the sale of gold bullion reported under the Ghana reporting segment.

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Perseus Mining Limited and its controlled entities Notes to the unaudited consolidated financial statements For the period ended 30 September 2014

3. SEGMENT INFORMATION – continued

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

Revenue Total revenue Results Operating profit before income tax Income tax expense Net profit Included within segment results: Share of net loss of associate accounted for using the equity method Depreciation and amortisation Share based payments 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 2014 30 Sept 2013 30 Sept 2014 30 Sept 2013 30 Sept 2014 30 Sept 2013 $’000 $’000 $’000 $’000 $’000 $’000	Consolidated Consolidated 30 Sept 2014 30 Sept 2013 $’000 $’000
	163 8 71,539 71,980 - -	71,702 71,988
	18,582 (7,862) 6,821 17,164 (412) (768)	24,991 8,534
	(108) - - - - - (248) (229) (11,935) (10,071) (34) (37) (144) (89) 16 39 (7) (1) 20,490 (4,857) (311) 72 3 (2) As at As at As at As at As at As at 30 Sept 2014 30 June 2014 30 Sept 2014 30 June 2014 30 Sept 2014 30 June 2014 43,236 43,272 488,683 456,590 63,195 62,160	(2,260) (5,680)
		22,731 2,854
		(108) - (12,217) (10,337) (135) (51) 20,182 (4,787) As at As at 30 Sept 2014 30 June 2014 562,022 572,552
	- 1,548 - - - - - 404 7,413 41,881 610 3,792 1,089 1,013 88,077 93,925 577 475	1,548 652 46,077 6,570 95,413 105,558

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Perseus Mining Limited and its controlled entities Notes to the unaudited consolidated financial statements For the period ended 30 September 2014

4. OTHER INCOME / EXPENSES AND ADJUSTMENTS	Consolidated	Consolidated
	Three months ended
30	Sept 2014	30 Sept 2013
	$’000	$’000
Profit before income tax has been determined after:
Other revenue:
Interest revenue	170	13
Interest revenue is included in ‘revenue’ in the statement of comprehensive income.
Foreign exchange gain / (loss):
Foreign exchange gain / (loss) on translation of inter-company loans	19,736	(4,561)
Foreign exchange loss on translation of VAT receivable	(1,470)	-
Foreign exchange gain / (loss) on other translations	1,916	(226)
	20,182	(4,787)
Changes in inventories of finished goods and work in progress:
(Write down) / write up of inventories due to increase / (decrease) in net realisable value	(4,623)	19,276
(Write down) / write up of inventories due to a (decrease) / increase in net realisable value is included in ‘changes in
inventories of finished goods and work in progress’ in the statement of comprehensive income.
Finance costs:
Interest and finance charges	(320)	(580)
Other costs:
Loss on disposal of property, plant and equipment	(4)	-
Depreciation and amortisation:
Amortisation of stripping asset	(5,508)	(3,974)
Other depreciation and amortisation	(6,709)	(6,363)
	(12,217)	(10,337)

5. INCOME TAX EXPENSE

The income tax expense that has been recognised in the statement of comprehensive income comprises $2,260,368 (30 September 2013: $5,680,404) primarily relating to the EGM profit for the period.

6. CASH AND CASH EQUIVALENTS Cash assets (i) Short term deposits (ii)	Consolidated 30 Sept 2014 30 June 2014 $’000 $’000 4,023 1,685 40,298 35,252
	44,321 36,937

(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 2014

7. RECEIVABLES

7. RECEIVABLES
Current Trade debtors (i) Sundry debtors (i) Other receivable (ii) Allowance for doubtful debts (iii) Non-current Other receivable (ii) Security deposits (iv) Movement in the allowance for doubtful debts: Balance at beginning of the period Impairment losses recognised on receivables Foreign exchange translation gains and losses Balance at the end of the period	Consolidated 30 Sept 2014 30 June 2014 $’000 $’000 9,358 12,061 3,273 3,267 4,866 20,615 (3,199) (2,958)
	14,298 32,985
	14,239 7,245 10,814 9,998
	25,053 17,243
	2,958 - - 3,040 241 (82)
	3,199 2,958

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 (“GRA”). During the period, $4.9 million (30 June 2014: $20.6 million) of this receivable has been classified as current as it is expected to be recovered within the next twelve months.

• (iii) Allowance for doubtful debts are recognised against sundry debtors for estimated irrecoverable amounts determined by reference to an analysis of the counterparty’s current financial position.

• (iv) At 30 September 2014, the group has US$9.4 million (approximately A$10.8 million) held in bank deposits which are subject to a lien and are collateral for a bank guarantee that has been issued to the Ghana Environmental Protection Agency in relation to environmental rehabilitation provisions concerning the EGM.

Past due but not impaired

With the exception of $3.2 million disclosed above which is fully provided for and the VAT receivable below, all of the remaining trade and other receivables are current.

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.

The other receivable relating to a VAT refund from the GRA is immediately repayable on demand in Ghanaian Cedis (“GHS”), is unsecured and bears no interest. Since the authorisation of treasury credit notes by the GRA, payments of employment taxes, withholding taxes and royalties have been offset against the VAT receivable. During the period, the group received a partial payment of the outstanding VAT debt from the GRA, totalling GHS17.6 million (US$5.8 million). Furthermore, on the 24[th] of September 2014, the GRA has advised in writing its decision to issue GHS 30.0 million (US$9.4 million) of Treasury Credit Notes to cover that part of the VAT refund that has been formerly audited and approved. The fair value of the non-current receivable, determined using a 10% discount rate and assuming it takes a year to recover the receivable in full, is approximately $12.9 million (30 June 2014: $6.6 million).

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Perseus Mining Limited and its controlled entities Notes to the unaudited consolidated financial statements For the period ended 30 September 2014

8. INVENTORIES

8. INVENTORIES
Current Ore stockpiles – at cost Ore stockpiles – at net realisable value Gold in circuit Materials and supplies Non-current Ore stockpiles – at net realisable value	Consolidated 30 Sept 2014 30 June 2014 $’000 $’000 6,933 7,817 931 4,303 4,404 2,311 23,755 22,680
	36,023 37,111
	668 2,025

Inventory expense

The inventory expense during the three month period ended 30 September 2014 was $60.0 million (30 June 2014: $238.4 million). The write down of inventories due to a decrease in net realisable value recognised during the period ended 30 September 2014 amounted to $4.6 million (30 June 2014 write up: $6.5 million) and is included in ‘changes in inventories of finished goods and work in progress’ in the statement of comprehensive income.

9. OTHER ASSETS

Current Prepayments Non-current Prepayments Available for sale financial assets (i) Reconciliation of movements in available for sale financial assets: Balance at beginning of the period Additions Impairment of available for sale financial asset (Devaluation) / revaluation on mark to market Balance at end of the period Current financial assets Non-current financial assets	8,996 5,943
	115 212 3,293 1,841
	3,408 2,053
	1,841 3,310 1,975 51 - (2,225) (523) 705
	3,293 1,841
	- - 3,293 1,841
	3,293 1,841

Terms and conditions relating to the above financial instruments:

(i) The group’s investment in Manas Resources Limited ($1.6 million) and Burey Gold Limited ($1.6 million) is recognised as an available for sale financial asset. During the period, the group discontinued equity accounting for Burey Gold Limited as it is no longer qualified as an associate. The investment was subsequently recognised as an available for sale financial asset. Refer to note 10 for further detail.

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Perseus Mining Limited and its controlled entities Notes to the unaudited consolidated financial statements For the period ended 30 September 2014

10. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Burey Gold Limited

In the prior year, the group held a 20.0% interest in Burey and accounted for the investment as an associate. On 5 September 2014 Burey completed the capital raising valued at approximately $2.72 million announced on 8 September 2014. Perseus did not participate in the capital raising and subsequently Perseus’s interest in Burey reduced from 20.0% to 15.5%. Due to the change of interest, the equity method of accounting was discontinued and the remaining investment recognised as a financial asset at fair value. Refer to note 9 for further detail.

The discontinuation of equity accounting resulted in the recognition of a gain in the statement of comprehensive income, as a result of the group shareholding in Burey being marked to market at the date of cessation of equity accounting, as illustrated below.

Investment in associated entity - Burey Gold Limited Reconciliation of movements in investments accounted for using the equity method: Balance at 1 July Share of loss for the year Share of foreign currency translation reserve movement Impairment reversal (i) Mark to market gain recognised on discontinuation of equity accounting Reclassification of remaining interest to financial assets Balance Summarised financial information of associate: Financial position Total assets Total liabilities Net assets Financial performance Total revenue Total loss for the year Group’s share of associate’s loss	Consolidated 30 Sept 2014 30 June 2014 $’000 $’000 - 1,548
	1,548 652 (108) (1,383) (72) 24 - 2,255 507 - (1,875) -
	- 1,548
	9,272 9,521 (88) (109)
	9,184 9,412
	21 25 (539) (6,915) (108) (1,383)

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Perseus Mining Limited and its controlled entities Notes to the unaudited consolidated financial statements For the period ended 30 September 2014

11. DERIVATIVE FINANCIAL INSTRUMENTS

11. DERIVATIVE FINANCIAL INSTRUMENTS
Current assets Cash flow hedge asset Current liabilities Financial liabilities at fair value – gold forward contracts Non-current assets Cash flow hedge asset	Consolidated 30 Sept 2014 30 June 2014 $’000 $’000 27,479 9,557
	- 115
	5,229 9,529

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 2014 there were cash flow designated hedge contracts in place for 89,000 ounces of gold with settlements scheduled between December 2014 and December 2015 with a weighted average price of US$1,535/oz. 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.

The amount reclassified during the period to the income statement was a gain of $1,873,020 (30 June 2014: $3,294,154)

12. FINANCIAL RISK MANAGEMENT

Set out below is an overview of financial instruments, other than cash and short-term deposits, held by the group as at 30 September 2014:

Financial assets: Receivables Derivative financial instruments Total current Receivables Available for sale investments Derivative financial instruments Total non-current Total Financial liabilities: Payables Total current Total	Loans and receivables Available-for- sale Fair value through profit and loss Fair value through other comprehensive income $’000 $’000 $’000 $’000 14,298 - - - - - - 27,479
	14,298 - - 27,479 25,053 - - - - 3,293 - - - - - 5,229
	25,053 3,293 - 5,229
	39,351 3,293 - 32,708
	36,705 - - -
	36,705 - - -
	36,705 - - -

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Perseus Mining Limited and its controlled entities Notes to the unaudited consolidated financial statements For the period ended 30 September 2014

12. FINANCIAL RISK MANAGEMENT - continued

Fair values

Set out below is a comparison of the carrying amounts and fair values of financial instrument as at 30 September 2014:

Financial assets: Receivables Derivative financial instruments Total current Receivables Available for sale instruments Derivative financial instruments Total non-current Total Financial liabilities: Payables Total non-current Total Fair value hierarchy	Carrying amount Fair value $’000 $’000 14,298 14,298 27,479 27,479
	41,777 41,777 25,053 23,749 3,293 3,293 5,229 5,229
	33,575 32,271
	75,352 74,048
	36,705 36,705
	36,705 36,705
	36,705 36,705

All financial instruments for which fair value is recognised or disclosed are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

• Level 1 Quoted market prices in an active market (that are unadjusted) for identical assets or liabilities

• Level 2 Valuation techniques (for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable)

• Level 3 Valuation techniques (for which the lowest level input that is significant to the fair value measurement is unobservable)

For financial instruments that are recognised at fair value on a recurring basis, the group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

There were no transfers between categories during the period.

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Perseus Mining Limited and its controlled entities Notes to the unaudited consolidated financial statements For the period ended 30 September 2014

12. FINANCIAL RISK MANAGEMENT - continued

The following table presents the group’s financial instruments measured and recognised at fair value at 30 September 2014

30 September 2014 Financial assets: Available for sale instruments Derivative financial instruments Total Assets for which fair values are disclosed: 30 September 2014 Receivables Total	Level 1 Level 2 Level 3 Total $’000 $’000 $’000 $’000 3,293 - - 3,293 - 32,708 - 32,708
	3,293 32,708 - 36,001
	Level 1 Level 2 Level 3 Total $’000 $’000 $’000 $’000 - 23,749 - 23,749
	- 23,749 - 23,749

Valuation techniques

The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and available-for-sale securities) is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the group is the current bid price. These instruments are included in level 1.

The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

Specific valuation techniques used to value financial instruments include;

• Quoted market prices or dealer quotes for similar instruments.

• The fair value of forward exchange contracts is determined using forward exchange market rates at the end of the reporting period.

• Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments.

The net fair value of cash and cash equivalents and non-interest bearing financial assets and liabilities of the group approximate their carrying values. The carrying values (less impairment provision if provided) of trade receivables and payable are assumed to approximate their fair values due to their short-term nature. Information about the fair value of the other receivable of VAT is provided in note 7.

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Perseus Mining Limited and its controlled entities Notes to the unaudited consolidated financial statements For the period ended 30 September 2014

13. ISSUED CAPITAL

• (a) Issued and paid-up share capital

(a) Issued and paid-up share capital
Balance at the beginning of the period Share placement at issue price of $0.47 on 21 February 2014 Transaction costs arising from issue of securities for cash Balance at the end of the period	Consolidated 30 Sep 2014 30 June 2014 $’000 Number $’000 Number
	476,429 526,656,401 445,404 457,962,088 - - 32,286 68,694,313 - - (1,261) -
	476,429 526,656,401 476,429 526,656,401

(b) Share Options

There were no share options on issue during the quarter ended 30 September 2014.

(c) Performance rights

Performance rights have been granted as follows:

Grant date Exercise / Exercise vesting date price	Opening Performance Performance rights Closing balance rights exercised / cancelled / balance 1 July 2014 issued expired 30 Sept 2014 Number Number Number Number
25-Nov-12 31-Dec-15 nil 1-Jan-13 31-Dec-15 nil 1-Jan-14 30-Jun-15 nil 1-Jan-14 31-Dec-16 nil 4-Jun-14 30-Jun-15 nil 4-Jun-14 31-Dec-16 nil	300,000 - - 300,000 1,358,911 - (70,136) 1,288,775 2,600,000 - (325,000) 2,275,000 2,600,000 - (325,000) 2,275,000 562,500 - - 562,500 562,500 - - 562,500
	7,983,911 - (720,136) 7,263,775

(d) 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.

14. CONTINGENCIES

Consistent with industry practice in Ghana, Perseus Mining (Ghana) Limited (“PMGL”) is currently undergoing a tax audit in connection with its 30 June 2010, 2011 and 2012 income tax returns. Various matters are currently being discussed as part of the audit process and to date the GRA has not issued PMGL with a formal report on its findings. Based on management's understanding of the matters currently under discussion they do not believe that the group will ultimately have any material exposure as a result of the current tax audit.

There were no other known contingent liabilities identified at 30 September 2014.

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Perseus Mining Limited and its controlled entities Notes to the unaudited consolidated financial statements For the period ended 30 September 2014

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 2014 30 June 2014 $’000 $’000 1,050 1,050 2,150 2,150 1,200 1,200
	4,400 4,400

(b) Capital commitments

The group is responsible for all rehabilitation of the EGM mining leases, which are currently estimated to cost approximately US$6.8 million and a provision has been recorded for this at balance 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 accept a renewal of the lease once the lease term has expired.

Future minimum lease payments payable under non-cancellable operating leases at 30 September 2014 are as follows:

Within one year One year or later and not later than five years Later than five years	Consolidated 30 Sept 2014 30 June 2014 $’000 $’000 415 411 652 758 - -
	1,067 1,169

16. EVENTS OCCURING AFTER THE END OF THE REPORTING PERIOD

Since the end of the 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.

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