PERSEUS MINING LIMITED - Interim / Quarterly Report 2015

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November 12, 2014

MANAGEMENT’S DISCUSSION & ANALYSIS For the three months ended September 30, 2014

This Management’s Discussion and Analysis (“MD&A”) of Perseus Mining Limited and its controlled entities (“Perseus” or the “Company”) is dated November 12, 2014 and provides an analysis of the Company’s performance and financial condition for the three months ended September 30, 2014 (the “September 2014 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, 2014 (the “2014 Financial Report”), and the Company’s unaudited interim consolidated financial statements for the September 2014 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 an 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 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. The remaining 10% interest in the EGM is a free-carried interest in the mine-owning company held by the Government of Ghana.
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 “Tengréla Gold Project”) focussed on the Tengréla 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 had 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 Ivorian Mining Code, and 5% owned by local interests.
A 90% interest in the Kayeya gold deposit which forms part of the Grumesa Gold Project (“GGP’’), an exploration stage gold project located 30 kilometers 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.

Perseus Mining Limited ABN 27 106 808 986 Level 2, 437 Roberts Road Subiaco WA 6008 Telephone: +61 8 6144 1700 Email: [email protected]

PO Box 1578 Subiaco WA 6008 Facsimile: +61 8 6144 1799 Website: www.perseusmining.com

In addition, Perseus owns (i) a 15.51% interest in Burey Gold Limited (“Burey”), an ASX-listed junior exploration company holding a portfolio of gold exploration properties in West Africa; and (ii) a 13.04% 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.

As at the date of this report, Perseus has no long term debt obligations. The Company has a commitment to deliver 89,000 ounces of gold at a weighted average gold price of US$1,535/oz under outstanding gold forward sale contracts. (Refer to the section below titled “ Liquidity and Capital Resources ”).

OVERVIEW OF THE SEPTEMBER 2014 QUARTER

Summary

Against a backdrop of fluctuating gold prices, Perseus’s balance sheet and operating performance has continued to strengthen during the Quarter. The benefits of Perseus’s short term strategy of focussing on productivity improvements and cost reductions at its flagship project, the EGM, are reflected in this report, as are the results of our medium term plan of upgrading the overall grade of ore processed at the EGM through successful exploration within trucking distance of the processing facility.

Quarterly gold production totalled 51,529 ounces, an increase of 22% relative to the June 2014 quarter and 12% more than in the September 2013 quarter. All-in site costs averaged US$959/oz for the Quarter representing a cost reduction of 28% relative to the previous quarter and 29% less than in the September 2013 quarter. Key production statistics for the Quarter are as shown below in Table 1.

Table 1: Key Production Statistics

Parameter	Unit	September	June	March
		Quarter	Quarter	Quarter
		2014	2014	2014
Total material mined	bcm	1,668,176	2,284,242	2,419,626
	tonnes	4,486,336	6,183,813	6,543,278
Waste to ore strip ratio	bcm:bcm	1.9	3.0	3.6
	tonnes:tonnes	1.9	3.0	3.6
Ore mined
 Oxide	tonnes	-	-	-
 Primary	tonnes	1,547,272	1,564,548	1,426,165
Ore grade mined
 Oxide	g/t gold	-	-	-
 Primary	g/t gold	1.15	1.16	1.11
Ore stockpiles
 Quantity	tonnes	3,462,407	3,682,405	3,624,825
 Grade	g/t gold	0.58	0.58	0.55
Mill throughput	tonnes	1,767,270	1,506,968	1,723,143
Milled head grade	g/t gold	1.05	1.02	0.95
Gold recovery	%	87	86	84
Goldproduced	ounces	51,529	42,543	43,787

Total ore and waste movement of 1,668,176 bank cubic metres (“bcm”) for the Quarter was nearly 27% less than the June 2014 Quarter (the “June Quarter”) of 2,284,242 bcm. Mill head grade at 1.05 g/t was 3% higher than the June Quarter head grade, while recovery of 87% was 1% higher than the June Quarter recovery. The average mill throughput rate of 926 dry tonnes per hour (“dtph”) was 7% higher than the June Quarter of 869 dtph due to less “ramp up” time following mill shutdowns as well as the impact of a number of incremental adjustments made to components of the plant including the cyclones.

EGM’s Mineral Resource estimate was updated to give Measured and Indicated Mineral Resources of 5.338M ounces of gold plus Inferred Mineral Resources of a further 2.336M ounces of gold.

High grade drill intercepts recorded from drilling programmes on the Bokitsi South, Mampong and Pokukrom deposits confirmed the potential for mining higher grade ore to supplement existing Proven and Probable Mineral Reserves as mill feed at the EGM.

Lycopodium Minerals Pty Ltd was appointed to revise the Sissingué Feasibility Study to reflect the selected processing flow sheet and revised assumptions related to mining, processing and service functions associated with the project.

As at September 30, 2014, Perseus had an available cash balance of $44.3 million (excluding $10.0 million in escrow), plus 6,405 ounces of gold on hand or at the refinery valued on that date at $8.9 million. The combined balance of cash and bullion on hand was $53.2M.

During the Quarter Perseus received a cash payment of GHS17.6M (US$5.8M) and a further GHS30.0M (US$9.4M) of Treasury Credit Notes as partial payment of the outstanding VAT debt owed to the Company by the Government of Ghana. Following receipt of the payments, a total of GHS46.8M (US$14.6M) of VAT refunds were outstanding at the end of the Quarter.

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, Agyakusu and Nkotumso that are also held by the Company or in which the Company has an interest, cover a total area of about 480 square kilometres.

Mining

During the Quarter, mining occurred in Stage 2 of the Fobinso Pit and Stages 2 and 3 of the AG pit, both of which are located on the western side of the Edikan mining leases, adjacent to the processing plant.

A total of 1,668,200 bcm of ore and waste was mined during the Quarter, nearly 27% less than in the June 2014 quarter. The reduction in mining rates was consistent with the Company’s plan of reducing investment in waste stripping until such time as a comprehensive review of the Company’s approach to mining is concluded and recommendations implemented.

Ore mined during the Quarter included 1,547,272 tonnes of primary ore grading 1.15g/t gold. Ore movements and the grade of ore mined were both in line with the previous quarter in accordance with current mine plans.

Ore stockpiles that include both high and low grade ore (but not mineralised waste) plus crushed ore decreased during the Quarter by 220,000 tonnes to 3,462,400 tonnes grading 0.58g/t gold, and containing approximately 64,000 ounces of gold. The reduction in stockpiles reflected the significant increase in ore milled during the Quarter, while at the same time ore mined remained relatively constant. At the end of the Quarter, the ore stockpiles were made up of approximately 29% oxide ore and 71% transitional/primary ore. Approximately 10% of the remaining stockpiled ore is classified as medium/high grade, containing greater than 0.6g/t gold, while 90% of the ore is classified as low grade containing 0.4 to 0.6g/t gold.

Processing

Perseus’s tactic of continuing to pursue incremental productivity improvements in the Edikan processing plant has continued to yield positive results as shown by the following productivity indicators:

Table 2: Plant Performance Statistics

	September 2014	June 2014	March 2014
	Quarter	Quarter	Quarter
Crusher
Run time (%)	54	51	54
Hourly throughput rate (wmt)	1,275	1,294	1,300
SAG Mill
Run time (%)	86	791	88
Hourly throughput rate (dmt)	926	869	902
Gold recoveryrate(%)	87	85	84

1. Impacted by fire and substation failure.

The increase in the SAG Mill run time to 86% during the Quarter reflects a material decrease in unscheduled downtime relative to the prior quarter when operations were interrupted by a fire and a substation failure. In addition, runtime was improved by more effective plant preventative maintenance and the restoration of stability in the Ghanaian electricity grid during the Quarter. The 6.5% increase in hourly throughput rates was due to less “ramp up” time following mill shutdowns as well as the impact of a number of incremental adjustments made to critical parts of the plant including the cyclones. The gold recovery rate also improved incrementally due to plant improvements most notably in the gravity circuit where the recovery rate averaged 20.2% for the Quarter.

Site Operating Costs

The all-in site unit cash costs for the Quarter (including production, royalties, investment in pre-stripping and inventory, development and sustaining capital) totalled US$959/oz, approximately 28% less than in the prior quarter and

approximately 29% less than in the September 2013 quarter. Please refer to Table 4-Key Quarterly Financial Statistics and Table 5-Quarter-on-Quarter Changes in Site Costs below for detailed statistics.

Approximately 49% of the EGM’s production costs during the Quarter were incurred by the mining department while a further 41% were incurred by processing and maintenance with the balance in general and administration. Unit costs in each of these areas were as follows:

Table 3: Unit Costs

Table 3: Unit Costs
Unit Cost	September 2014	June 2014	March 2014
	Quarter	Quarter	Quarter
Mining US$/t mined	4.61	4.49	4.08
Processing US$/t milled	9.83	11.80	9.94
G & A US$/month	1.46	1.45	1.67

Considerable focus is being placed on implementing cost savings in the mining area, with the view to realising improvements by late 2014 prior to the planned commencement of development works on Fobinso Stage 3, Fetish, Chirawewa and Bokitsi South pits.

Processing and maintenance costs decreased quarter-on-quarter as a result of reduced maintenance costs including contract labour hire and maintenance consumables.

In future periods, it is expected that expenditure on sustaining capital will increase relative to expenditure during the Quarter (US$48/oz) as work begins to accelerate on the relocation housing project, required to provide mining access to some of the eastern pits.

Table 4: Key Quarterly Financial Statistics - EGM

Parameter	Units	September	June	March	December
		Quarter	Quarter	Quarter	Quarter
		2014	2014	2014	2013
Gold produced	ounces	51,529	42,543	43,787	48,360
Total gold sales1	ounces	49,703	45,767	43,873	44,617
Average sales price	US$/oz of gold sold	1,330	1,333	1,294	1,318
Mining cost	US$/t material mined	4.61	4.49	4.08	3.71
Processing cost	US$/t ore milled	9.83	11.80	9.94	10.77
G & A cost	US$M/month	1.46	1.45	1.67	1.62
All-In Site Cash Cost
Gold Production Cost:
Cash Cost	US$/oz	868	1,150	1,071	1,038
Royalties	US$/oz	88	82	87	75
Total production cost	US$/oz	951	1,232	1,158	1,113
Capital Costs:
Inventory and Stripping	US$/oz	(40)	23	44	30
Other Capital	US$/oz	48	69	84	85
Total capital cost	US$/oz	8	92	128	115
Total All-InSite Cost	US$/oz	959	1,324	1,286	1,228

Notes:

A gold sale is recognised in Perseus’s accounts when the Company’s contracted gold refiner, Rand Refineries Limited, takes delivery of gold in the EGM gold room. For accounting purposes, the sales price is the spot price of gold on the day of transfer and subsequently adjusted to reflect the realised gold price.

Based on the above, the EGM is on track to achieve both production and cost guidance for the six months ending 31 December 2014 of 95-105,000 ounces of gold at US$1,160-1,280/oz respectively.

Table 5: Quarter-on-Quarter Changes in Site Costs

Cost		Quarter-on-Quarter Change in:	Quarter-on-Quarter Change in:
	Volume	Unit costs	Total Costs
Mining	-27.0%	3.0%	-26.0%
Processing	17.0%	-17.0%	-2.0%
Cash Production costs	21.0%	-25.0%	-9.0%
Sustaining & Other Capital	21.0%	-91.0%	-89.0%
All-in Site Costs	21.0%	-28.0%	-12.0%

Gold Sales and Price Hedging

Of the 49,703 ounces of gold sold during the Quarter (June 2014 Quarter: 45,767 ounces) at a weighted average delivered price of US$1,330/oz (June 2014 Quarter: US$1,333/oz), a total of 36,000 ounces were delivered into forward sales contracts at an average price of US$1,303/oz with the remaining gold sales occurring at prevailing spot prices.

As at September 30, 2014, the Company’s gold price hedging position included 89,000 ounces of gold deliverable up to and including December 31, 2015 at a weighted average price of US$1,535/oz. This includes a total of 70,000 ounces of gold deliverable in quarterly instalments during the 2015 calendar year at a price of US$1,600/oz.

The total hedge position was “in the money” to the extent of $32.7M (US$28.5M) as at September 30, 2014 (June 30, 2014: $19.1M (US$19.0M)). In the December 2014 quarter, 19,000 ounces of gold is scheduled to be delivered at an average price of US$1,296/oz under the Company’s mandatory hedge programme.

VAT Receivable

Revised Mineral Resources:

Following an infill drilling programme on the EGM mining leases in the period up to June 2014, and after adjusting key assumptions to reflect actual results to date, Mineral Resource estimates were updated by independent consultant, RungePincockMinarco in accordance with the JORC Code – 2012 Edition. Readers should refer to the relevant market release made on August 27, 2014 for Table 1 disclosures as required by the JORC Code (2012) for each of the revised Mineral Resource estimates as well as a detailed summary of the current Mineral Resource estimate for each of the mineral deposits identified to date on the EGM tenements, calculated using a 0.40 g/t gold cut-off grade.

Relative to the previous Mineral Resource estimate for the EGM published in June 2013, the updated Mineral Resource contains 357,300 fewer ounces of gold in the Measured and Indicated categories and 74,300 fewer ounces in the Inferred category. After adjusting both Mineral Resource estimates to the mining surface as at 30 April 2014, the net decrease in Mineral Resources is 155,500 ounces (2.8%) in the Measured and Indicated category and 73,800 ounces (3.0%) in the Inferred category.

The Mineral Resource estimate for the EGM is as follows:

Table 6: EGM Measured and Indicated Mineral Resources

Deposit	Measured Resources	Measured Resources	Indicated Resources	Indicated Resources	Measured + Indicated Resources	Measured + Indicated Resources
	Quantity Grade Mt g/t gold	Gold Ounces	Quantity Grade Mt g/t gold	Gold Ounces	Quantity Grade Mt g/t gold	Gold Ounces
AF Gap - Fobinso Esuajah South Esuajah North Fetish Chirawewa Bokitsi Mampong Dadieso	34.5 1.1 9.5 1.8 16.9 0.9 12.6 0.9 - - 0.7 3.7 - - - -	1,228,000 546,000 494,000 380,000 - 86,000 - -	24.5 0.9 7.3 1.6 18.4 0.8 18.1 1.1 5.8 1.0 1.6 2.6 - - - -	698,000 370,000 493,000 663,000 195,000 133,000 - -	59.0 1.0 16.8 1.7 35.3 0.9 30.8 1.1 5.8 1.0 2.3 3.0 - - - -	1,926,000 916,000 986,000 1,043,000 195,000 219,000 - -
Total	74.2 1.1	2,734,000	75.7 1.0	2,552,000	150.0 1.1	5,285,000

Based on May 2014 Resource estimation.
0.4g/t gold cut-off applied.
Last updated in May 2014 and allows for mining depletion to June 30, 2014.

Table 7: EGM Inferred Mineral Resources

Deposit	Inferred Resources	Inferred Resources
	Quantity Grade Mt g/t gold	Gold Ounces
AF Gap - Fobinso Esuajah South Esuajah North Fetish Chirawewa Bokitsi Mampong Dadieso	28.5 0.8 5.7 1.1 3.6 0.9 9.8 1.1 10.4 0.9 2.9 1.8 8.6 0.9 5.3 1.5	731,000 211,000 105,000 346,000 284,000 170,000 257,000 253,000
Total	74.8 1.0	2,356,000

Based on May 2014 Resource estimation.
0.4g/t gold cut-off applied.
Last updated in May 2014 and allows for mining depletion to June 30, 2014.

Mine Planning

Using the revised Mineral Resource estimate as a basis, work is progressing on revising the existing designs of each of the pits taking into account assumptions based on recent operating experience. Detailed consideration will also be given to rescheduling the order in which new pits are developed in order to optimise the overall value of the mine. This work will result in a revision to the Edikan Life of Mine Plan which, based on the current schedule, is intended to be published late this calendar year.

EGM Mineral Reserve Estimate

The Mineral Reserves, which comprise material from seven open pits including Abnabna, Fobinso, Fetish, Chirawewa, Bokitsi, Esuajah North and Esuajah South plus stockpiles and taking into account mining depletion, are as follows:

Table 8: Ore Reserves – EGM[1,2,3,4]

Deposit	Proved Reserves	Proved Reserves	Probable Reserves	Probable Reserves	Proved & Probable Reserves	Proved & Probable Reserves	W: O Ratio3
	Quantity Mt Grade g/t gold	Gold ‘000 oz	Quantity Mt Grade g/t gold	Gold ‘000 oz	Quantity Mt Grade g/t gold	Gold ‘000 oz
AF Gap - Fobinso Esuajah South Esuajah North Fetish Chirewawa Bokitsi ROM Stockpiles	24.2 1.2 5.9 1.7 11.8 0.9 7.8 0.9 - - - - - -	908 327 354 224 - - -	6.0 0.8 1.0 1.8 3.9 0.9 6.1 1.1 2.9 1.1 2.1 2.3 3.7 0.6	154 55 111 219 106 158 69	30.2 1.1 6.9 1.7 15.7 0.9 13.9 1.0 2.9 1.1 2.1 2.3 3.7 0.6	1,062 382 465 443 106 158 69	2.4 8.1 1.4 2.1 3.9 6.3 -
Total	49.7 1.1	1,813	25.7 1.1	872	75.4 1.1	2,685	2.7

Based on June 2013 Resource estimation.
Variable gold grade cut-off based on material type, Oxide = 0.6g/t, Transition = 0.5g/t and Fresh = 0.4g/t
Inferred mineral resource is considered as waste.
Last updated in August 2013 and allows for material mined to June 30, 2014.

Sissingué Development Project, Côte d’Ivoire

The SGP is located in the north of Côte d’Ivoire and is situated within an 885sq km land package consisting of the Sissingué exploration permit area and the adjoining Tengréla South exploration permit area, together referred to as the Tengréla Gold Project. The permits are located along a structural/stratigraphic corridor within the Syama-Boundiali greenstone belt approximately 150km south-southeast of the Morila gold mine (7.0M ounces) in Mali and 65km west northwest of Randgold’s Tongon deposit (4.3M ounces) in Côte d’Ivoire.

Project Development

Since late 2013, Perseus has been reviewing processing options for the SGP with the aim of reducing capital and operating costs as a prelude to reassessing the Feasibility Study model. A smaller, higher grade operation with significantly reduced capital costs has been targeted and relevant metallurgical test work was carried out to assess a range of alternative processing options. This preliminary economic assessment was completed during the Quarter and a process flow sheet involving combined gravity and CIL process was confirmed as the preferred process route.

Subsequent to the end of the Quarter, Lycopodium Minerals Pty Ltd, an internationally recognised engineering and project management consultancy which provides a complete range of services for the evaluation, development, implementation and optimisation of projects, was appointed to revise the project Feasibility Study. The revised study will reflect not only the adopted processing flow sheet, but also updated assumptions on mining, processing and various service functions associated with the project.

Also subsequent to the end of the Quarter, the Company has re-engaged with the Ivorian Government to negotiate a Mining Convention for the project.

Based on current plans, it is estimated that Management will be in a position to table a project development proposal conditional on financing for consideration by the Board of Perseus in early 2015.

SGP Mineral Resource Estimate

The Company’s Measured and Indicated Mineral Resource base at SGP is 0.9M ounces of gold and the Inferred Mineral Resource base is 0.3M ounces and is tabulated below in Tables 9 and 10. The Company’s Proven and Probable Mineral Reserves at SGP are as shown in Table 11.

Table 9: M&I Mineral Resources – SGP[1 ]

Ore type	Measured Resources Quantity Mt Grade g/t gold Gold Ounces	Measured Resources Quantity Mt Grade g/t gold Gold Ounces	Indicated Resources	Indicated Resources	Measured + Indicated Resources	Measured + Indicated Resources
		Gold Ounces	Quantity Mt Grade g/t gold	Gold Ounces	Quantity Mt Grade g/t gold	Gold Ounces
Oxide Transition Primary	0.9 1.6 0.6 2.0 2.7 2.5	48,000 39,000 217,000	4.6 1.2 1.3 1.3 8.9 1.4	171,000 56,000 394,000	5.5 1.2 1.9 1.6 11.6 1.6	219,000 95,000 611,000
Total	4.2 2.2	304,000	14.8 1.3	621,000	19.0 1.5	925,000

0.6g/t gold cut-off applied.

Table 10: Inferred Mineral Resources – SGP[1]

Ore type	Inferred Resources	Inferred Resources
	Quantity Grade Mt g/t gold	Gold Ounces
Oxide Transition Primary	0.9 1.0 0.7 1.0 5.4 1.4	31 21 239
Total	7.0 1.3	291

0.6g/t gold cut-off applied.

SGP Mineral Reserve Estimate

Work on the re-design of the SGP open pit based on the current Mineral Resource estimate is underway in conjunction with the review of process options discussed above. The current Mineral Reserves for the SGP are as follows:

Table 11: Ore Reserves - SGP

Ore type	Proved Reserves	Proved Reserves	Probable Reserves	Probable Reserves	Proved & Probable	Reserves
	Quantity Mt Grade g/t gold	Gold ‘000 oz	Quantity Mt Grade g/t gold	Gold ‘000 oz	Quantity Mt Grade g/t gold	Gold ‘000 oz
Oxide/Transition Primary	- - - -	- -	3.4 2.1 6.3 2.1	224 433	3.4 2.1 6.3 2.1	224 433
Total	- -	-	9.7 2.1	657	9.7 2.1	657

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.

Exploration

Ghana

During the Quarter, US$1.257M was spent on exploration activities in Ghana at the EGM and on adjoining licence areas, including 5,550m of drilling, with the following results.

Bokitsi South Prospect - Ayanfuri Mining Lease

In the June 2014 Quarter, an initial program of Mineral Resource infill drilling was conducted on the Bokitsi South deposit on the Ayanfuri Mining Lease which hosts the EGM. This programme included 2,870m of reverse circulation drilling (“RC”) and 103m of diamond (“DD”) drilling in 37 holes. Results from the initial drilling program were released to the market in parts on June 19 and July 7, 2014 and readers should refer to those releases for assay results from that initial programme along with the relevant JORC Code Table 1 disclosures.

During the Quarter, a smaller follow-up exploration drilling programme was completed south of the main Bokitsi South Prospect. This programme consisted of 880m of RC and 141m of diamond-core tails. All assays were returned with several significant intercepts indicating that two small steeply plunging lodes of mineralisation are present 40 to 160m south of Bokitsi South. The shallower lode extends from surface and is cut off at relatively shallow depth, while the deeper lode is open at depth and contains higher grades which might be exploitable from underground if sufficient mineralised tonnes are present. Significant intercepts include:

BKRC106 - 4m at 4.2g/t gold from 43m and 4m at 10.4g/t gold from 56m BKRDD051 - 13m at 7.6g/t gold from 97m including 3m at 21.3g/t gold from 102m

Further drilling is to be planned to infill and define the extents of the higher grade lode.

Mampong South Prospect - Nanankaw Mining Lease

The Mampong deposit is located between 700m and 2,100m southwest of the operating Abnabna pit at the EGM. The deposit consists of two mineralised zones including a wider, lower grade zone to the north which represents the southwestern strike extension of the Abnabna-Fobinso gold-bearing granite, and in the south, a narrower, higher grade zone which is hosted in a separate 10m to 15m wide granitic dyke situated approximately 200m south-east of and parallel to the Abnabna-Fobinso granite. Mineralisation at Mampong is essentially the same as that in the Abnabna-Fobinso deposits and consists of stockwork quartz veining in altered granite with trace to several percent disseminated pyrite plus arsenopyrite.

During the Quarter the southern higher grade portion of the Mampong deposit was the subject of an in-fill drilling program. The 5,560m program was planned to in-fill previous drilling to a drill spacing of approximately 20m by 20m on the southern, higher grade portion of Mampong to better define that portion of the Mineral Resource and upgrade it to the Indicated Mineral Resource category for inclusion into the EGM Ore Reserves and life-of-mine plan. Approximately half of the planned drilling program has been completed, with 2,584 meters of RC and 161 meters of diamond core tails drilled to date. Results for all of the 53 holes drilled thus far in this program have been received.

Although most of the drill intercepts were in line with those from past drilling, several exceptionally high grade intercepts, as listed below, suggest potential for delineating pockets of high grade mineralisation and improvement of the overall grade of the southern Mampong Mineral Resource. In total however, the drill results returned to date indicate the Mampong South Zone weakens at depth, but relatively shallow higher grade mineralisation persists along much of its strike which might be exploited by a shallow pit.

MPRC150	-	12m at 14.2g/tgold from 8m including 1m at 123.3g/t from 10m
MPRC156	-	4m at 5.1g/tgold from 14m including 1m at 14.9g/t from 15m
MPRC160	-	4m at 6.4g/tgold from 62m
MPRC168	-	4m at 35.5g/tgold from 59m including 2m at 64.0 from 60m
MPRDD022	-	8m at 4.2g/tgold from 58m

The remainder of the planned program of infill drilling at Mampong South will resume shortly.

Pokukrom Prospect - Nsuaem Prospecting Licence

An exploration RC drilling program that commenced last quarter was completed during the Quarter to follow up on significant results received during last year’s drilling program at the Pokukrom Prospect. Thirty-seven RC holes totalling 2,477m were drilled in the program with 584m drilled during the current Quarter. Drilling focused on the two previously delineated zones of mineralisation in order to confirm and extend the zones. The northernmost zone was

closed off on strike with a fairly short strike length to the mineralisation, but remains open at depth. The southern narrower zone remains open on strike to the northwest and to depth.

Most of the results were relatively weak, however several significant intercepts were returned as follows:

NSRC117 - 16m at 3.6g/t gold from 12m including 2m at 13.6g/t from 24m NSRC118 - 14m at 2.1g/t gold from 58m

Follow up drilling is planned although this work will be assigned a relatively low priority given the extent of mineralisation appears to be fairly limited.

Agyakusu Prospecting Licence

A small exploration RC drilling program was conducted on the Agyakusu Prospecting License to test gold in soil anomalism along strike to the north-east of the Fobinso Deposit at the EGM. Fifteen RC holes totalling 1,200m were drilled. Although the drilling intercepted strong silica-pyrite altered sediments with appreciable quartz veining, gold assays were weak with the exception of two anomalous drill holes at the north-eastern limit of drill testing. Additional exploration will be conducted on the prospect next quarter to extend the soil sampling coverage and drill testing further to the north-east.

Côte d’Ivoire

During the Quarter, a total of US$0.479M was spent by Perseus on exploration activities in Côte d’Ivoire, including 7,150m of drilling, with the following results.

Mahalé Exploration Permit

A drilling program of approximately 6,000m has commenced at the Bélé Prospect on the Mahalé License in Côte d’Ivoire to evaluate targets from a recently completed IP-Resistivity survey and to follow up significant results from last year’s drilling program. During the quarter 33 RC holes for 2,775m were drilled.

Results have been received for the first 17 holes. The results are relatively weak thus far, with the exception of one anomalous hole that tested a new IP-geochemical target 1km to the north-northwest of the Bélé East Prospect, and one hole drilled into the Bélé Prospect returned a very exceptional intercept of 28m at 12.4g/t gold. This hole was directed to the west while most of the previous drilling was drilled to the east, and indicates that the mineralisation in the Bélé East Zone is dipping moderately to the east. Therefore, the previous mostly eastward-directed drilling at Bélé East may have missed, or at least did not adequately test the Bélé East mineralisation.

Additional westward-directed and deeper drilling is planned for the Bélé East Zone with the aim of defining a small high grade resource and drill testing of additional IP targets plus further testing of the Bélé Central zones will continue over the next month.

Tengrela Permits

A program of auger drilling commenced on the Sissingué Exploitation Permit to evaluate areas of the Papara-SissinguéKanakono mineralised corridor that may have masking regolith which might have hidden mineralisation from standard soil geochemistry surveys conducted in the past. A total of 655 auger holes for 4,375m of drilling were drilled near Papara and Sissingué, with results pending. The 1,625 hole program should be completed next month and significant auger anomalism will be followed up with RAB or AC drilling.

Programs of geological mapping, prospecting and rock sampling were also conducted on the Tengrela South exploration permit.

Burkina Faso

The Koutakou, Tangayé, Touya and Barga licences in north-western Burkina Faso are being explored under an earn-in agreement with unlisted Australian company West African Gold Limited. There was no work conducted on the Burkina Faso licenses during the quarter. A small air-core drilling program is planned for the next quarter to evaluate the large Koutakou gold in soil anomaly plus several areas of active artisanal mining.

COMPANY OUTLOOK FOR THE QUARTER ENDING DECEMBER 31, 2014

Based on current work schedules for the Quarter ending December 31, 2014 the Company provides the following outlook:

Edikan Gold Mine

Produce gold at a total all-in site cash cost that is in line with Half Year guidance;
Continue to fine-tune plant metallurgical performance and maximise SAG mill throughput;
Continue training of operating and maintenance staff;
Complete current drilling programmes to delineate potential higher grade mill feed at Mampong South; and
Continue to implement business improvement initiatives across all departments of the EGM.

Sissingué Gold Mine Development Project

Update Feasibility Study for the SGP based on preferred development configuration and flow sheet;
Re-convene discussions with the Ivorian government about a Mining Convention covering the revised SGP;
Continue exploration on the Mahalé exploration licence and the Sissingué exploitation permit.

OVERALL FINANCIAL PERFORMANCE OF THE COMPANY

The financial performance of the Company will be affected by the operation of the EGM and potential 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 are currently incurred 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 Results1 for the three	Sep 30	Jun 30	Mar 31	Dec 31	Sep 30	Jun 30	Mar 31	Dec 31
months ended	2014	2014	2014	2013	2013	2013	2013	2012
Total revenue	71.702	64.595	64.262	63.373	71.988	69.301	77.254	71.992
Net profit / (loss) after tax	22.731	(12.034)	(16.002)	(6.878)	2.854	10.277	(0.892)	15.109
Basicprofit /(loss) per share(cents)	4.24	(2.25)	(3.34)	(1.25)	0.41	2.53	(0.23)	2.96

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

The operating results for the September 2014 Quarter included revenue earned from the sale of precious metals (September 2014 Quarter: $71.532 million; September 2013 Quarter: $71.975 million) less the cost of the goods sold (September 2014 Quarter: $52.083 million; September 2013 Quarter: $48.084 million). The increase in total revenue, from $64.595 million in the June 2014 Quarter to $71.702 million in the September 2014 Quarter, is a result of higher gold sales (September 2014 Quarter: 49,703 oz; June 2014 Quarter: 45,767 oz) and a gain on spot deferred contracts entered into during the Quarter (September 2014 Quarter: $2.312 million; June 2014 Quarter: loss of $0.202 million), slightly offset by a decrease in average prices received (September 2014 Quarter: US$1,330/oz; June 2014 Quarter: US$1,333/oz of gold sold).

Other movements during the September 2014 Quarter includes a gain recognised on discontinuation of equity accounting of $0.507 million (September 2013 Quarter: nil) and share of net losses in associates of $0.108 million (September 2013 Quarter: nil).

During the September 2014 Quarter a foreign exchange gain ($20.182 million) was recognised (September 2013 Quarter: loss of $4.787 million) arising from a depreciation of the AUD relative to the USD during the period (September 30, 2014: 0.8727, June 30, 2014 0.9439).

In addition, the result includes interest revenue (September 2014 Quarter: $0.170 million; September 2013 Quarter: $0.013 million), depreciation and amortisation (September 2014 Quarter: $12.217 million; September 2013 Quarter: $10.337 million), administration and corporate overheads (September 2014 Quarter: $1.243 million; September 2013 Quarter: $1.755 million).

DISCUSSION OF FINANCIAL CONDITION

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

below.
Financial Position1 as at:	Sep 30	Jun 30	Mar 31	Dec 31	Sep 30	Jun 30	Mar 31	Dec 31
	2014	2014	2014	2013	2013	2013	2013	2012
Cash and cash equivalents	44.321	36.937	42.510	16.016	23.091	35.480	38.409	39.674
Total Assets	595.114	562.022	594.445	603.192	572.552	590.380	520.820	519.653
Total Liabilities	89.743	95.413	108.485	117.113	105.558	108.536	117.685	128.696
Net Assets	505.371	466.609	485.960	486.059	466.994	481.844	403.135	390.957

1All amounts shown are in millions of dollars

Total Assets

Total assets have increased during the September 2014 Quarter by $33.092 million (June 2014 Quarter decrease of $32.423 million). The September 2014 Quarter increase is due to an increase in current assets of $8.584 million and an increase in non-current assets of $24.508 million. Details of movements in specific accounts follow.

Cash and cash equivalents

At September 30, 2014, the Company had available cash or cash equivalent resources of $44.321 million plus a further $10.814 million of restricted funds on deposit securing environmental obligations. This cash balance represents an increase relative to the position as at June 30, 2014 ($36.937 million plus restricted cash of $9.998 million). The increase in cash reserves of $7.384 million during the September 2014 Quarter is due to an increase in inflows from the sale of gold and silver during the period, offset by payments associated with operation of the EGM, purchase of other fixed assets and payments for the exploration and administration activities.

The net increase in cash reserves of $7.384 million during the September 2014 Quarter is discussed in some detail in ” the “Discussion on Cash flows .

Receivables

At September 30, 2014, the Company’s current receivables were $14.298 million (June 30, 2014: $32.985) while noncurrent receivables amounted to $25.053 million (June 30, 2014: $17.243 million). The decrease in current receivables during the September 2014 Quarter relative to the prior Quarter is a result of the timing of gold sales and a decrease in a VAT receivable due from the Ghana Revenue Authority (“GRA”) as refunds totalling US$5.8 million in cash have

been received during the Quarter, as well as a further US$9.4 million in the form of Treasury Credit Notes received from the GRA. The increase in non-current receivables is due to an increase in the non-current component of the VAT receivable due from the GRA.

Inventory

At September 30, 2014, the Company held inventories of $36.691 million (June 30, 2014: $39.136 million) of which $36.023 million is classified as current and $0.668 million is classified as non-current. The net decrease in inventory during the September 2014 Quarter ($2.445 million) relative to the position at June 30, 2014, is the result of a decrease in all stockpiles except gold in circuit and bullion on hand, along with a write-down of low grade stockpiles, offset by an increase in gold in circuit inventory and materials and supplies on hand.

Property, plant and equipment

At September 30, 2014, the Company recognised on its balance sheet a total of $189.175 million for property, plant and equipment (“PP&E”) (June 30, 2014: $184.521 million).

The Company capitalised $2.870 million of expenditure on PP&E during the September 2014 Quarter before expensing depreciation of $3.407 million. In addition, $4.727 million was reclassified from PP&E to mine properties and disposals of PP&E amounted to $0.009 million. Due to the appreciation of the USD against AUD, a $9.927 million foreign exchange gain was recorded against PP&E during the September 2014 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, 2014, the Company recognised mine properties of $202.995 million on its balance sheet (June 30, 2014: $189.005 million). During the September 2014 Quarter, $3.234 million of expenditure of Mine Properties (most of which relates to deferred waste accounting entry) has been capitalised and $8.809 million of amortisation has been expensed. In addition, $4.727 million was reclassified from PP&E to mine properties and the net appreciation of the USD against AUD during the period referred to above gave rise to $14.838 million foreign exchange gain being recorded against mine properties.

Exploration and evaluation expenditure

At September 30, 2014, the Company recognised mineral interest acquisition and exploration expenditure of $37.469 million on its balance sheet (June 30, 2014: $33.565 million).

The Company capitalised $1.810 million of exploration and evaluation expenditure incurred on its Ghanaian and Ivorian exploration tenements during the September 2014 Quarter ($1.331 million in the June 2014 Quarter) before recording a foreign exchange gain of $2.094 million.

Other assets

At September 30, 2014, the Company recognised other assets of $12.404 million on its balance sheet (June 30, 2014: $7.996 million), of which $8.996 million is classified as current and $3.408 million is classified as non-current. The increase in other assets during the September 2014 Quarter is due to an increase in prepayments and a $1.875 million reclassification of the Company’s investment in Burey following the discontinuing of equity accounting as Burey no longer qualified as an associate, offset by the loss on the mark-to-market revaluation of the available for sale financial asset (investment in Manas and Burey). The increase in prepayments during the September 2014 Quarter reflects the normal commercial activity associated with the EGM, slightly offset by the unwinding of capitalised borrowing costs classified as prepayments.

Derivative financial instruments

As at September 30, 2014, the Company held forward sales contracts for 89,000 ounces of gold and recorded an asset of $32.708 million (June 30, 2014: 108,000 ounces of gold and recorded an asset of $19.086 million) on its balance sheet. The movement in mark-to-market value has been recorded as equity. $27.479 million (June 30, 2014: current asset of $9.557 million) of the balance has been classified as a current asset as these forward contracts settle within twelve months of balance date. The balance of $5.229 million (June 30, 2014: non-current asset of $9.529 million) has been classified as a non-current asset. The asset 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.

Total Liabilities

As at September 30, 2014, the Company had liabilities totalling $89.743 million compared to $95.413 million at June 30, 2014. The changes in total liabilities during the September 2014 Quarter are attributable to decreases in current liabilities of $12.573 million offset by an increase in non-current liabilities of $6.903 million. Details of movements in specific accounts follow below.

Payables

During, the September 2014 Quarter amounts owed to creditors, relating mainly to the operation of the EGM, decreased to $38.328 million from a total outstanding at June 30, 2014 of $53.077 million.

On a quarter-on-quarter basis, creditors at September 30, 2014 were $14.749 million lower than at the end of the June 2014 Quarter. The decrease relative to the June 2014 Quarter reflects changes in timing of payment of outstanding invoices in the September 2014 Quarter.

Provision

A provision of $8.235 million as at September 30, 2014 for future rehabilitation work relating mainly to both old and new mining activity at EGM as well as for the long-service entitlement was $0.566 million higher than the amount provided for at June 30, 2014 of $7.669 million. The change during the September 30, 2014 Quarter reflects an appreciation of the USD against the AUD during the period, as highlighted above.

DISCUSSION ON CASHFLOWS

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

Cash flows1 for three	Sep 30	Jun 30	Mar 31	Dec 31	Sep 30	Jun 30	Mar 31	Dec 31
months ended	2014	20142	20142	20132	20132	20132	2013	2012
Operating activities	8.499	4.033	7.527	6.060	1.466	2.778	15.054	6.130
Investing activities	(7.671)	(10.220)	(10.674)	(15.049)	(12.083)	(12.083)	(15.576)	(13.658)
Financing activities	-	(0.002)	31.027	-	-	-	(0.128)	(60.729)

1All amounts shown are in millions of dollars

2Payments relating to capitalised deferred waste have been reclassified from operating activities to investing activities

After considering the effects of foreign exchange movements, the Company’s cash balance increased by $7.384 million during the September 2014 Quarter while in the corresponding period in 2013 cash decreased by $12.389 million.

Operating activities during the September 2014 Quarter resulted in total cash receipts of $73.026 million (June Quarter: $60.921 million) from the sale of precious metals produced at the EGM and $0.123 million (June Quarter: $0.175 million) from bank interest that were offset by administration expenses and production expenses at EGM of $64.650 million (June Quarter: $57.061 million) and borrowing costs of nil (June Quarter: $0.002 million), giving a net cash inflow for Operating Activities during the period of $8.499 million (June Quarter: inflow of $4.033 million). This net cash inflow was $7.033 million more than the corresponding amount in the September 2013 Quarter when net inflows associated with Operating Activities totalled $1.466 million. In the September 2013 Quarter, there were cash receipts of $73.522 million from the sale of precious metals produced at the EGM. Interest received in the September 2013 Quarter was $0.022 million, administration expenses and production expenses were $72.073 million and borrowing costs of $0.005 million.

Investing activities during the September 2014 Quarter included payments for mine properties of $3.234 million (June 2014 Quarter: $5.370 million), development expenses at EGM and SGP of $2.628 million (June Quarter: $3.313 million), payments relating to exploration in Ghana and Côte d’Ivoire of $1.705 million (June Quarter: $1.607 million), investment in fixed assets of $0.004 million (June Quarter: $0.012 million), investments in listed entities of $0.100 million (June Quarter: nil), offset by proceeds on disposal of property plant and equipment of nil (June Quarter: of $0.082 million) that generated a net cash outflow of $7.671 million (June Quarter: $10.220 million). In the corresponding September 2013 Quarter, investing activities included payments for mine properties ($1.798 million) development of EGM and SGP ($6.956 million), exploration associated with the EGM and SGP ($3.189 million) and investment in fixed assets ($0.140 million), resulting in a net cash outflow associated with investing activities of $12.083 million.

Financing activities cash flows in the September 2014 Quarter were nil, as there were no financing activities during the Quarter (June 2014 Quarter: $0.002 million). There were no financing activities during the September 2013 Quarter.

LIQUIDITY AND CAPITAL RESOURCES

As at September 30, 2014, the Company’s cash and cash equivalents amounted to $44.321 million (June 30, 2014: $36.937).

The Company does not currently have a working capital deficiency. At September 30, 2014, the Company has sufficient funds or assets available to convert into cash, to enable payment of debts as and when they fall due and to meet its planned growth. As previously stated, the Company’s short to medium term plans include maximising the cash margin at the EGM through improving recoveries, coupled with less waste stripping and implementing a cost reduction program, reviewing the decision on the development of the SGP and associated infrastructure after taking into account the results of optimised life of mine plans for both the EGM and the SGP and gold market conditions, and continued exploration on a limited basis for gold on exploration tenements associated with these projects as well as on other exploration tenements held by the Company in West Africa, 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.

On February 17, 2014, Perseus completed a placement to institutional and sophisticated investors of about 68.7 million ordinary shares, representing 15% of the Company’s existing capital to raise approximately $32 million (the “Placement”). Settlement of the Placement occurred on February 21, 2014, and the new shares that rank equally with existing shares, were allotted and commenced trading on the ASX on February 24, 2014. The price under the Placement was set at $0.47 (“Placement Price”) per new share issued. The Placement Price represented a 6.9% discount to the last ASX closing price of Perseus shares of $0.505 on February 14, 2014 and a 2.3% discount to the ASX five-day volume weighted average price of $0.48 (up to and including February 14, 2014). The proceeds of the Placement are intended for capital expenditure to accelerate productivity improvements and access to the eastern pits at the EGM and to provide for further balance sheet flexibility.

In June 2014, the Company received two partial payments of the outstanding VAT debt from the GRA, totalling GHS30.0 million (US$10.0 million). During the Quarter, Perseus received a cash payment of GHS17.6 million (US$5.8 million) and a further GHS30.0 million (US$9.4 million) of Treasury Credit Notes. The Company is continuing to work with the Government to agree repayment terms for the balance of the outstanding debt and also to avoid the current situation where a large VAT receivable has accumulated and remained unpaid for an extended period.

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 mentioned below, as part of the Company’s cost reduction program, Perseus reduced the Available Commitment limit on its revolving line of credit to nil, following the decision to postpone development on the SGP. A commitment limit may be renegotiated with the lenders if a decision to go ahead with the development of the SGP is taken.

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 68.7 million share placement during the March 2014 Quarter. The Company has nil options outstanding as at 30 September 2014 and no new options were issued during the September 2014 quarter. During the June 2011 Quarter, the Company drew $80.211 million under its project debt facility. This was subsequently fully repaid in November 2012. 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”), which is still on foot and governs the Company’s hedge arrangements, 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 grants additional security in favour of the lenders by December 31, 2011 (as extended); (ii) there is parliamentary ratification of the Edikan mining leases and stability agreement by December 31, 2011 (as extended); (iii) 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 as soon as possible. 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. As at September 30, 2014 no amounts were drawn under the Facility Agreement.

During the December 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 provided 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 was revised to 4.0 percent per annum and the Commitment fee was reduced to 1.75 percent per annum. Permitted uses of funds drawn under the facility were amended to allow for repayment of intercompany loans owed by Perseus Mining (Ghana) Limited to Perseus.

During the September 2013 Quarter and as part of the Company’s cost reduction program, Perseus reduced the Available Commitment limit on its US$100 million line of credit to nil. This eliminated the 1.75% per annum undrawn

line fee, and political risk insurance on the debt, that was payable in future periods. The Available Commitment limit may be renegotiated with the lenders if a decision to go ahead with the development of the SGP is taken.

As at September 30, 2014, a total of 89,000 ounces of gold (June 30, 2014: 125,000 ounces of gold) had been hedged under gold forward sale contracts for settlement from December 2014 to December 2015 at an average sale price of US$1,535/oz. This includes a total of 70,000 ounces of gold at an average price of US$1,600/oz that was sold forward in the September 2012 Quarter, following the successful restructure, extension and up-sizing of the debt facility. This hedging represents 31% of the Company’s total forecast gold production to December 31, 2015 and approximately 3% of the gold contained in the Company’s currently defined Mineral Reserves.

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.

COMMITMENTS

The following table sets forth information regarding the Company’s contractual obligations as at September 30, 2014. The Company has no long term debt, finance lease obligations, operating leases or purchase obligations except as indicated below.

	Less than 1	1-5 years	After 5 years
	Year
Exploration expenditure1	1.050	2.150	1.200
Rent of corporatepremises	0.415	0.652	-
Total	1.465	2.802	1.200
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.

FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS

The principal financial instruments used by the Company as at September 30, 2014 are cash, receivables, financial assets at fair value, derivative financial instruments, 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 (including currency risk, interest rate risk, commodity price risk and equity price 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 2014 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 and the Ghanaian Cedi. 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. In addition, the parent entity has an intercompany receivable from its subsidiary denominated in US dollars which is eliminated on consolidation. The gains or losses on re-measurement of this intercompany receivable from US dollars to Australian dollars are not eliminated on consolidation. There has been no significant change in the Company’s exposure to currency risk or its objectives and policies for managing these risks during the September 2014 Quarter.

In November 2012 the Company fully repaid its project finance facility. Consequently, it presently has no borrowings at variable rates. During the September 2013 Quarter and as part of the Company’s cost reduction program, Perseus reduced the Available Commitment limit on its US$100 million line of credit to nil, eliminating the 1.75% per annum undrawn line fee, as mentioned above. There were no changes in the Company’s exposure to interest rate risk during the September 2014 Quarter. The Company’s objectives and policies for managing these risks have not changed during the September 2014 Quarter.

OFF BALANCE SHEET ARRANGEMENTS

There are no off-balance sheet arrangements as at September 30, 2014.

TRANSACTIONS WITH RELATED PARTIES

Remuneration (including salaries, Directors’ fees and the issue of share options and performance rights) 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.

The Company has no on-going 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 Company 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 2014 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 prospectively are made.

(ii) Impairment of assets

In accordance with accounting policy note 1(g) in the June 2014 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 forward estimates of:

(i) 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;
(ii) Estimated production and sales levels;
(iii) Estimated 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 Company measures the cost of equity-settled transactions with employees and consultants 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 the Monte Carlo Simulation model for performance rights 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 $0.135 million for the Quarter ended September 30, 2014 ($0.152 million for the quarter ended June 30, 2014; $0.051 million for the quarter ended September 30, 2013).

(iv) Restoration and rehabilitation provisions

As set out in accounting policy note 1(t) in the June 2014 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 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 2014 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) 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, including the amount of recoverable reserves and estimates of future capital expenditure. The Company 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 mine 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

Mineral 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.

(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.

CHANGES IN ACCOUNTING POLICIES INCLUDING INITIAL ADOPTION

In the September 2014 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 July 1, 2014. All of the new standards and amendments to standards that are mandatory for the first time for the financial year beginning July 1, 2014 were adopted and they did not have a material impact on the current period or any prior period, and is not likely to affect future periods.

OUTSTANDING SECURITIES DATA

At September 30, 2014, the Company had issued 526,656,401 shares (June 30, 2014: 526,656,401; March 31, 2014: 526,656,401; December 31, 2013: 457,962,088; September 30, 2013: 457,962,088), nil options (June 30, 2014: nil; March 31, 2014: 1,440,000; December 31, 2013: 1,540,000; September 30,2013: 1,990,000) and 7,263,775 performance rights (June 30, 2014: 7,983,911; March 31, 2014: 7,263,813; December 31, 2013: 2,091,575; September 30, 2013: 2,687,408).

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

Ordinary shares 526,656,401 Performance rights over unissued shares 7,263,775

Since September 30, 2014 and up to the date of this MD&A, the Company has not issued any shares, options or performance rights.

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, 2014, 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 2014 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 2014 Quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. As at September 30, 2014, 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 SGP, 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 SGP, 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 SGP;
risks related to capital cost increases at the SGP;
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, political instability and the spread of infectious diseases 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 associated with the spread of infectious diseases, such as Ebola;
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 26, 2014.

TECHNICAL DISCLOSURES

Competent Person and ASX Listing Rules Statement :

All production targets for the Edikan Gold Mine (EGM) referred to in this report are underpinned by estimated Ore Reserves which have been prepared by competent persons in accordance with the requirements of the JORC Code.

The information in this report that relates to EGM Ore Reserves, SGP Ore Reserves and SGP Mineral Resources is based on, and fairly represents, information and supporting documentation compiled by Mr Kevin Thomson, a Competent Person who is a Professional Geoscientist with the Association of Professional Geoscientists of Ontario. This information was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported. The information in this report that relates to EGM Mineral Resources was first reported by the Company in compliance with the JORC Code 2012 in market announcements released on 27 August 2014 and 4 September 2014. The Company confirms that it is not aware of any new information or data that materially affects the information in those market announcements.

The information in this report that relates to exploration results was first reported by the Company in compliance with the JORC Code 2012 in its Quarterly Activities Report released on 16 October 2014. The Company confirms that it is not aware of any new information or data that materially affects the information in those market announcements. For a description of Perseus’ data verification process, quality assurance and quality control measures, the effective date of the mineral resource and mineral reserve estimates contained herein, details of the key assumptions, parameters and methods used to estimate the mineral resources and reserves set out in this report and the extent to which the estimate of mineral resources or mineral reserves set out herein may be materially affected by any known environmental, permitting, legal, title, taxation, socio-political, marketing or other relevant issues, 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 - Tengréla Gold Project, Côte d’Ivoire’’ dated December 22, 2010 in relation to the Edikan Gold Mine (formerly the Central Ashanti Gold Project) and the Tengréla Gold Project respectively.