PERSEUS MINING LIMITED - Management Reports 2012

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May 11, 2012

MANAGEMENT’S DISCUSSION & ANALYSIS For the three months ended March 31, 2012

This Management’s Discussion and Analysis (“MD&A”) of Perseus Mining Limited and its controlled entities (“Perseus” or the “Company”) is dated May 11, 2012 and provides an analysis of the Company’s performance and financial condition for the three months ended March 31, 2012 (the “March 2012 Quarter” or “Quarter”).

This MD&A should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the year ended June 30, 2011 (the “2011 Financial Report”), and the Company’s audit reviewed consolidated financial statements for the half year ended December 31, 2011. The financial statements (and the financial information contained in this MD&A) comply with Australian Accounting Standards as issued by the Australian Accounting Standards Board and International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. These documents are available under the Company’s profile on the Canadian System for Electronic Document Analysis and Retrieval (SEDAR) at sedar.com and on the Company’s website, www.perseusmining.com .

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

COMPANY OVERVIEW

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

Perseus is a gold mining, exploration, evaluation and development corporation with activities focussed on underexplored gold belts located in West Africa.

Its principal assets are:

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

Perseus Mining Limited ABN 27 106 808 986 30 Ledgar Road, Balcatta, Western Australia 6021 PO Box 717 Balcatta WA 6914 Telephone: (618) 9240 6344 Facsimile: (618) 9240 2406 Email address: [email protected] Website: www.perseusmining.com

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

Perseus has long-term debt obligations under the terms of a project finance facility that was fully drawn to US$85 million on June 23, 2011. The first scheduled repayment under the debt facility of US$11.0 million was made during the March 2012 Quarter reducing the debt outstanding to US$74 million. Associated with the project debt facility, the Company sold forward 230,000 ounces of gold, of which forward contracts for the sale of 210,000 ounces of gold remain current at March 31, 2012 at a weighted average price of $1,253 per ounce (details of which are provided elsewhere in this MD&A) following the delivery of 20,000 ounces of gold under forward sales contracts during the March 2012 Quarter at an average price of US$1,216 per ounce.

HIGHLIGHTS OF THE MARCH 2012 QUARTER

The key highlights of the March 2012 Quarter includes:

Edikan Gold Mine

*Edikan Gold Mine*
Key Operating Metrics	Units	March 2012Quarter		December 2011 Qtr Actuals
		Actuals	Guidance
Recovered gold Cash costs(1) Cash costs including royalties	oz US$/oz US$/oz	38,796 723 830	35 - 40,000 950 -	35,801 n/a n/a
Averagegold salesprice	US$/oz	1,513(2)	-	1,667

1) Cash costs are C1 cash costs as per Brook Hunt definition, and include direct operating costs after adjusting for US$9.8M of costs of deferred waste stripping and ore inventory movements.

2) Includes both spot and forward sales of gold.

Strong mill performance was achieved at EGM following the scheduled maintenance shutdown of the mill in February 2012. Monthly production in March 2012 totalled 19,026oz of gold from 435,575t of ore at an adjusted cash cost of US$576/oz, including mining costs of $2.80/t mined and processing costs of $7.15/t milled. Given production rates and costs in March and April 2012, the June 2012 Quarter guidance of 50,000oz to 55,000oz at a cash cost of $690/oz remains unchanged.

Ghanaian Exploration

During the March 2012 Quarter, Perseus drilled a total of 40,775 metres at and around the EGM and on its other Ghanaian exploration tenements (December 2011: 34,392 metres). A revised Mineral Resource estimate for Esuajah North was completed by Runge Limited in March 2012. The Company’s Measured and Indicated resource base at Edikan is now 5.6Moz of gold and the Inferred resource base is 1.7Moz before adjustment for mining depletion.

Tengrela Gold Project Development

The Environmental and Social Impact Assessment Report (“ESIA”) for the TGP was reviewed at a technical validation meeting conducted by the Ivorian National Environmental Agency (“ANDE”) on October 28, 2011 and on December 28, 2011 the ESIA was approved by ANDE. In anticipation of the successful permitting of the development of the Sissingué gold deposit, significant progress was made on designing the processing facility during the March 2012 Quarter, Tenders for selected early works contract packages were also received and assessed during the Quarter.

Côte d’Ivoire Exploration

During the March 2012 Quarter six drill rigs operated on the Company’s Tengrela licenses. A total of 26,859 metres of drilling was completed during the March 2011 Quarter (December 2011 Quarter: 34,540 metres). While assay turnaround times continue to be low, from the limited number of holes where results were received several anomalous exploration intercepts were recorded, at Sissingué East, Sissingué North, Podio and Zing.

Corporate

At March 2012, Perseus’s available cash and cash equivalent balances totaled $117.120 million. Approximately $2.401 million in new equity capital was generated during the March 2012 Quarter through the exercise of options to subscribe for ordinary shares in the Company. The first scheduled repayment of US$11.0 million was made under the Company’s project debt facility during the March 2012 Quarter and the Company delivered the first 20,000 ounces of gold into forward sales contracts that formed part of a hedge programme required as a pre-requisite to drawing down the project debt facility.

OPERATIONS REVIEW

EDIKAN GOLD MINE

The EGM comprises a group of large gold deposits located in the Ashanti gold belt in Ghana in the vicinity of the township of Ayanfuri and the villages of Abnabna, Fobinso, Gyaman, Nkonya, Ataase and Besam.

Key Quarterly Production Statistics

*Key Quarterly Production Statistics*
Parameter	Unit	March Quarter 2012 December Quarter 2011
Total material mined Waste to Ore Strip Ratio Ore mined  Oxide  Primary Grade mined  Oxide Ore  Primary Ore Ore Stockpiles (closing balance)  Quantity  Grade Mill Throughput Head grade Gold recovery Goldproduced	bcm1 bcm:bcm wmt2 wmt g/t Au3 g/t Au wmt g/t Au dmt4 g/t Au % oz	4,760,351 3,679,706 4.2 3.3 907,846 779,022 1,294,328 1,016,494 1.0 1.1 1.3 1.0 2,703,000 1,669,000 0.9 0.9 1,027,540 1,086,899 1.40 1.26 83.7 81.0 38,796 35,801

Denotes bank cubic metres. 2. Denotes wet metric tonnes. 3. Denotes grams/tonne of gold. 4. Denotes dry metric tonnes

Mining

The total of 4,760,351 bcm of ore and waste mined during the March 2012 Quarter included 907,846t of oxide ore at 1.0g/t Au and 1,294,328t of transition and primary ore at 1.3g/t Au. The 29% increase in mine production relative to the December 2011 Quarter reflected an increase in mining activity associated with the commencement of cutbacks for the final AF Gap and Fobinso pits. Accordingly, the 4.2:1 waste to ore strip ratio (expressed on the basis of bcm:bcm) for the March 2012 Quarter was higher than the life of mine strip ratio of 3.3:1.

As a consequence of the increased mining activity during the March 2012 Quarter, ore stockpiles (including both high and low grade ore but not mineralised waste) increased to 2,195,000t of oxide ore at 0.9g/t Au and 508,000t of primary ore at 1.0g/t Au. Grade control results continue to reconcile positively to the Mineral Resource model which is the principal reason for the larger than expected oxide ore stockpiles. Mill grade to grade control reconciliation also remains positive at an estimated 3.7% year to date.

Mining in the relatively high grade AF-Gap pit has reached transitional and primary ore while high grade transitional ore is currently being produced from the Fobinso pit. Mining of the Stage 1 pit at Abnabna is nearing completion.

Processing

Prior to the planned maintenance shutdown of the processing plant in mid-February, the mill throughput rate averaged 11,265dmt per day. Post the shut-down, this rate increased to 13,330dmt per day for the balance of February. In March, mill throughput rates increased further to an average of 14,050dmt per day resulting in a total of 19,026oz of gold being produced in the month from 435,575dmt of ore. Gold recoveries from blended oxide transition and sulphide ore increased to 83.7% during the March 2012 Quarter.

During March, two daily throughput records and six daily gold production records were set for the mine. Subsequent to the end of the March 2012 Quarter, both the daily throughput rate and gold production records set in March have been eclipsed in April as the performance of the processing facility continues to improve. Unplanned mill shut-downs reduced significantly from 379hrs combined in January-February to 99hrs in March as a result of a number of issues being dealt with during the 8 day shut-down in February. Power supply was at 98% net availability.

The performance of the processing facility during the March 2012 Quarter continues to validate the efficacy of the Edikan process flow sheet that allows for a very low reagent unit consumption, with total cyanide consumption at 0.08kg/t, steel ball consumption of 0.9kg/t and power usage of about 23.5kW/t in January and February dropping to 19kW/t in March with increased throughput.

Key Quarterly Financial Statistics

*Key Quarterly Financial Statistics*
Parameter	Units	Total
Total gold sales Average sales price Gross Cash Costs Including:  Mining cost  Processing cost  Admin & Refining Accounting Adjustment Adjusted Cash Costs Royalties Adjusted Cash Costs including royalties Sustainingcapital andplant upgrade costs	oz US$/oz of gold sold US$/oz produced US$/tonne of material mined US$/tonne of ore milled US$M / month US$M US$/oz produced US$/oz produced US$/oz produced US$M	45,490 1,513 975 2.59 8.63 1.20 (9.8) 723 107 830 8.8

Of the 45,490oz of gold that were sold during the March 2012 Quarter at an average delivered price of US$1,513/oz, 25,490oz were sold at spot gold prices averaging US$1,745/oz. The Company also delivered 20,000oz of gold into forward sales contracts at an average of US$1,217/oz. This reduced the Group’s outstanding hedge commitment to 210,000oz of gold, to be delivered in quarterly instalments, the last in the December 2014 Quarter, at an average price of US$1,253/oz.

The adjusted cash cost for the March 2012 Quarter of US$723/oz compared favourably to guidance of US$950/oz. This was due to higher than expected grades, lower than forecast unit mining costs and overheads that more than compensated for higher unit milling costs arising from lower than forecast mill throughput in the early part of the March 2012 Quarter. Following the scheduled maintenance shutdown in February 2012, mill performance improved significantly in March 2012 as noted above, resulting in monthly processing costs of $7.15/tonne milled. The adjustment to gross cash costs of US$9.8 million reflected costs incurred on stockpiling ore and deferred costs of waste stripping, consistent with the increase in mining activity that occurred during the Quarter as previously discussed.

A total of US$8.8M of capital was incurred during the March 2012 Quarter including US$5.3M on tailings dam modifications to meet EPA requirements.

During the March 2012 Quarter, the first scheduled debt repayment took placed with US$11.0M of project debt being repaid to lenders Macquarie Bank Limited and Credit Suisse AG, reducing the balance of outstanding debt to US$74.0M.

Subsequent to the end of the March 2012 Quarter, the Company has received advice confirming previously announced changes to Ghanaian tax regime that will take effect from 9 March 2012. The changes that impact the EGM include an increase in the corporate tax rate from 25% to 35% and a change in the method of computation of capital allowances from the reducing balance method to a straight line method over five years.

Ghana Exploration

A total of 40,775m of drilling was completed on the Edikan mining leases and the neighbouring Dunkwa license during the March 2012 Quarter. Four rigs are active, with one rig evaluating district exploration targets at Dunkwa and three rigs engaged on resource infill and extensional drilling at Edikan. Assay turnaround has improved significantly in Ghana.

Drilling is shifting from principally resource/reserve drilling to a larger component of near-mine and district exploration drilling. Resource/reserve drilling will continue at Edikan, with several resource and reserve updates to be released in 2012. However, increasing emphasis on target generation, with continuing infill and extensional geochemical sampling, IP geophysical surveys, geological and regolith mapping, data compilation, analysis and interpretation, is expected to result in multiple new targets for ongoing exploration drill testing in 2012.

Recent near-mine exploration drilling at Edikan has returned several significant intercepts from new targets, including Besem Gap prospect (700m east of the Esuajah North deposit), the Wampem soil anomaly (2.8 kilometers northeast of Esuajah North) and NPRC049 which tested gold in soil anomalism 150m west of the Bokitsi-Nkonya structure and situated 1.6km southwest of the Bokitsi South Extension deposit, attesting to the exploration potential remaining on the Edikan mining leases.

Deeper drilling at the Fetish deposit at Edikan Gold Mine (EGM) in Ghana continues to confirm strong gold mineralisation at depth, including:

EFRDD046 - 44m at 3.0g/t gold from 327m and 14m at 2.4g/t gold from 420m. EFRDD047 - 24m at 4.3g/t gold from 397m. EFRDD048 - 15m at 3.3g/t gold from 256m, 11m at 4.8g/t gold from 294m and 18m at 1.4g/t gold from 308m. EFDD127 - 5m at 11.4g/t gold from 288m, 23m at 1.1g/t gold from 303m and 19m at 1.2g/t gold from 347m.

Deeper drilling at Esuajah South & Esuajah North at EGM confirmed gold mineralisation at depth, including: AKRDD252 - 11m at 1.0g/t gold from 352m, 78m at 3.4g/t gold from 373m and 16m at 4.0g/t gold from 469m. ENRDD028 - 8m at 1.5g/t gold from 308m, 29m at 1.6g/t gold from 330m, 1m at 14.8g/t gold from 353m and 16m at 1.9g/t gold from 385m.

Exploration drilling at EGM returned significant results from multiple prospects, including: ENS121 - Besem Gap 30m at 2.3g/t gold from 90m. ENS141 - Besem North 24m at 1.8g/t gold from 60m. ENS143 - Besem North 28m at 1.6g/t gold from 52m. WPRC028 - Wampem 12m at 4.8g/t gold from 8m. CHRC159 - Chirawewa South 26m at 3.5g/t gold from 16m.

Esuajah North Resource Estimate

A revised Mineral Resource estimate for Esuajah North was completed by Runge Limited in March 2012. Measured & Indicated Mineral Resources at a 0.8g/t gold cut-off increased by 51% to 15.1Mt at 1.2g/t gold and at a 0.4g/t gold cutoff increased 59% to 32.7Mt at 0.9g/t gold containing 920,000oz of gold. Inferred resources decreased from 9.3Mt at 0.7g/t to 6.3Mt at 0.8 g/t Au containing 168,000oz of gold. The 400m-long Esuajah North deposit averages more than 100m in width and contains Measured and Indicated resources of 3,400oz per vertical metre for the first 150m below the existing shallow pit. Details of the revised Mineral Resource estimates are as follows:

EGM, Esuajah North, Measured and Indicated Mineral Resources (>0.8g/t Au)

Deposit	Measured Resources	Indicated Resources	Indicated Resources	Total Measured and Indicated Resources
	Tonnes Mt Au g/t Au Ounces	Tonnes Mt Au g/t	Au Ounces	Tonnes Mt Au g/t Au Ounces
Oxide Transition Primary	0.07 1.6 4,000 0.11 1.3 5,000 8.3 1.2 313,000	0.03 1.0 0.06 1.1 6.6 1.1	900 2,000 239,000	0.1 1.4 5,000 0.2 1.3 7,000 14.9 1.2 552,000
Total(1)	8.5 1.2 321,000	6.6 1.1	242,000	15.1 1.2 563,000

Notes: 1 Rounding applied to totals.

EGM, Esuajah North, Measured and Indicated Mineral Resources (>0.4g/t Au)

Deposit	Measured Resources	Indicated Resources	Total Measured and Indicated Resources
	Tonnes Mt Au g/t Au Ounces	Tonnes Mt Au g/t Au Ounces	Tonnes Mt Au g/t Au Ounces
Oxide Transition Primary	0.1 1.3 5,000 0.2 1.1 6,000 16.9 0.9 488,000	0.05 0.8 1,000 0.1 0.9 3,000 15.4 0.8 417,000	0.2 1.1 6,000 0.3 1.0 9,000 32.3 0.9 905,000
Total(1)	17.2 0.9 498,000	15.5 0.8 422,000	32.7 0.9 920,000

Notes: 1 Rounding applied to totals.

EGM, Esuajah North, Inferred Mineral Resources

Deposit	>0.8g/t Au(1)	0.4g/t-0.8g/t Au(2)	Total Inferred Resources
	Tonnes Mt Au g/t Au Ounces	Tonnes Mt Au g/t Au Ounces	Tonnes Mt Au g/t Au Ounces
Oxide Transition Primary	0.01 0.8 100 2.7 1.1 96,000	0.01 0.6 100 0.02 0.6 400 3.6 0.6 71,000	0.01 0.6 100 0.03 0.6 500 6.3 0.8 167,000
Total(1)	2.7 1.1 96,000	3.6 0.6 72,000	6.3 0.8 168,000

Notes: 1. Rounding applied to totals.

The Company’s Measured and Indicated Mineral Resource base at Edikan is now 5.6Moz of gold and the Inferred Mineral Resource base is 1.7Moz before adjustment for mining depletion.

Reserve Estimate

The Company is undertaking updated pit designs for Fetish and Esuajah North and initial designs for Chirawewa and Bokitsi which will be incorporated in the planned June quarter 2012 Mineral Reserve upgrade.

TENGRELA GOLD PROJECT

The Sissingué gold deposit is one of a number of prospects that comprise the TGP. In November 2010, the Company completed a DFS on developing an open cut mining operation based on the Sissingué gold deposit together with a CIL gold processing plant and related infrastructure.

Permitting

Following the completion of the positive DFS for the Sissingué Gold Mine, the application process for the permits required for development of a gold mining and processing operation at Sissingué was initiated. This process was suspended temporarily in late 2010 / early 2011 but resumed during the September 2011 Quarter.

During the December 2011 Quarter the Company’s ESIA was approved by ANDE with formal advice to the effect being received on 28 December 2011. Technical reviews of the DFS were also completed by the authorities during this period and during the March 2012 Quarter, the Company was informed that issuance of the exploitation licence (i.e. mining lease) required to develop the Sissingué Gold Project was contingent only upon finalising agreement between the State and the Company on the terms of a fiscal regime to apply over the life of the Project.

Implementation

Following resumption of activities by the Company in Côte d’Ivoire in the September 2011 Quarter, invitations to tender for design and engineering associated with the Sissingué Gold Mine were issued to a number of engineering firms and a contract was awarded to GR Engineering Services Limited (“GRES”) during the September 2011 Quarter, enabling detailed design of the processing facility and related infrastructure to commence.

In anticipation of the successful permitting of the development of the Sissingué gold deposit, Perseus’s project development team in conjunction with GRES made significant progress on the design of the processing facility during the December 2011 Quarter. By the end of the period, enquiries for equipment selection had commenced and prices for certain items of equipment had been received from potential suppliers. In December 2011, an order was placed with Outotec Pty Ltd for the manufacture and supply of a 4,500kW, 5.5metre diameter, and 9.2 metre long SAG mill. The SAG mill is scheduled to be completed within 45 weeks ex-works, and the complete mill package is expected to be delivered to site in late 2012.

The selection and notification of preferred tenders for the supply of equipment continued during the March 2012 Quarter and tenders for early works contract packages based on enquiries issued during the December 2011 Quarter, were also received and evaluated during the period. In addition, Perseus’s project development team in conjunction with GRES continued to make significant progress on the detailed design of the processing facility.

Contracts for site earthworks and early construction works will be awarded when clarity is obtained on the likely fiscal regime to apply during the term of the Project and the Company will move to full scale project development as soon as practical following the formal granting of the Exploitation Licence.

Development Funding

The DFS for the development of the Sissingué Gold Mine and the Tengrela Gold Project Technical Report estimated the capital cost of the project at US$115 million, excluding sustaining capital. The finance required to fully fund the development of the Sissingué Gold Mine will be sourced from Perseus’s existing cash reserves (at March 31, 2012 the Company had cash or cash equivalent resources of $117.120 million plus a further $2.164 million of funds on deposit securing environmental obligations) and from cash flow generated by the EGM.

Exploration

The Company currently has six drill rigs operating and completed 26,859m of drilling on various prospects on the Tengrela Gold Project during the Quarter. While assay turnaround remains poor, from the limited number of holes where results were received several anomalous exploration intercepts were recorded, including 4m at 33.5g/t gold at Sissingué East, 14m at 5.9g/t and 13m at 2.4g/t gold at Podio, 4m at 10g/t gold at Sissingué North and 4m at 10.0g/t gold from Zing.

Infill drilling on the Sissingué deposit returned significant results, including:

SD194 - 58m at 3.1g/t gold from 85m. SD196 - 42m at 1.7g/t gold from 75m, 8.6m at 1.0g/t gold from 121m and 8m at 1.8g/t gold from 137m.
SD197 - 22.5m at 2.7g/t gold from 52.5m. SD191 - 10m at 4.9g/t gold from 173m. SD192 - 2.2m at 26.7g/t gold from 83m.

Exploration drilling at Tengrela returned significant results from multiple prospects, including:

SAC232 - Sissingué East 4m at 33.5g/t gold from 72m.
Podio 1.7m at 5.1g/t gold from 101m, 13m at 2.4g/t gold from 115m and 8m at 3.6g/t gold from 162m.

PDD004

Podio 14m at 5.9g/t gold from 60m.
PLC099 Podio 14m at 5.9g/t gold from 60m. ZAC033 - Zing 4m at 10.0g/t gold from 24m. SRB1496 - Sissingué North 4m at 10.0g/t gold from 8m. KAC202 - Kanakono
Kanakono 19m at 2.0g/t gold from 40m to end of hole.

GRUMESA GOLD PROJECT

The GGP is currently based on the Kayeya gold deposit located in the Adansi South District of the Ashanti Region of Ghana, approximately 35 kilometres by road to the south of Obuasi, and approximately 30 kilometres to the east of the EGM. From a geological perspective the Kayeya deposit is situated in the Tarkwaian Series sediments. The Kayeya deposit contains Indicated Mineral Resources of 25.1M tonnes grading 0.6g/t gold for 0.47Moz of gold plus an additional Inferred Mineral Resource of 16.4M tonnes at 0.5g/t gold for 0.25Moz of gold.

A feasibility study for a heap leach project based on the Kayeya deposit was completed in October 2009. The Company is currently undertaking an Environmental Impact Assessment, using external consultants, as a precursor to filing an EIS, revising the feasibility study to DFS standard, and potentially seeking regulatory approval for the development of a gold mine and processing operation at Kayeya.

TOTAL MINERAL RESOURCES AND MINERAL RESERVES

Total Mineral Resources (Including Reserves)

Deposit (cut-off g/t Au)	Measured Indicated Inferred
	Tonnes (million) g/t Au Ounces Au (,000) Tonnes (million) g/t Au Ounces Au (,000) Tonnes (million) g/t Au Ounces Au (,000)
EGM (1) >0.8g/t	49.5 1.5 2,378 38.2 1.3 1,603 24.9 1.4 1,111
EGM (1) 0.4g/t- 0.8g/t	34.2 0.7 718 34.5 0.6 706 25.7 0.7 602
Grumesa (2) >0.4 (3)	25.1 0.6 471 16.4 0.5 247
Tengrela (4) >1.0g/t	0.9 3.2 90 9.1 2.5 706 3.3 1.7 171
Tengrela (4) 0.5-1.0g/t	0.04 0.8 1 5.5 0.8 134 3.6 0.7 86
Total >0.8g/t (1.0g/t Tengrela) Total >0.4g/t (0.5g/t Tengrela)	50.4 1.5 2,468 47.3 1.5 2,309 28.2 1.4 1,282 84.6 1.2 3,187 112.4 1.0 3,620 73.9 0.9 2,217

Notes

1 Last updated in March 2012 and does not allow for mining depletion.
2 Last updated in December 2010.
3 Primary reported above a 0.4g/t Au cut-off, oxide/transition report above a 0.2g/t Au cut-off.
4 Last updated in November 2010.
5 The Company holds 90% of EGM, 90% of Grumesa and 85% of Tengrela after allowing for Government equity at mining stage.

Total Mineral Reserves

Deposit	Proven Probable Total
	Tonnes (million) g/t Au Ounces Au(,000) Tonnes (million) g/t Au Ounces Au(,000) Tonnes (million) g/t Au Ounces Au(,000)
EGM >0.4g/t(1,2) Tengrela >0.55g/t(3)	47.7 1.3 1,974 39.2 1.0 1,300 86.9 1.2 3,273 - - - 9.7 2.1 657 9.7 2.1 657
Total	47.7 1.3 1,974 48.9 1.3 1,957 96.6 1.3 3,930

Notes

1 >0.4g/t Au cut-off for Abnabna-Fobinso, >0.5g/t Au cut-off for all other deposits.
2 Last updated in December 2010, does not allow for material mined.
3 Last updated in November 2010.

For a description of the key assumptions, parameters and methods used to estimate the Mineral Resources and Mineral Reserves and any known legal, political, environmental or other risks that could materially affect the potential development of the mineral resources or minimal reserves, please refer to the EGM Technical Report or the Tengrela Technical Report, as the case may be.

COMPANY OUTLOOK FOR THE QUARTER ENDING JUNE 30, 2012

Based on current work schedules for the Quarter ending June 30, 2012 the Company plans to:

Edikan Gold Mine

Progressively increase throughput rate of the processing plant at the EGM above the nameplate rate of 5.5 TPA;
Target gold production of 50-55,000oz at cash cost of US$690/oz;
Continue active exploration drilling and prepare for upgrades to the current Mineral Reserve estimates.

Tengrela Gold Project

Expedite the full permitting of the development of the Sissingué Gold Mine;
Advance detailed engineering design and contract packaging for the development of the Sissingué Gold Mine;
Continue exploration drilling at Sissingué and other TGP targets.

Business Development

Continue to manage the preparation of an environmental impact statement relating to the development of a satellite gold mining and heap leach operation based on the Kayeya deposit which forms part of the GGP;
Continue to investigate opportunities for expanding the Company’s inventory of Mineral Resources and Mineral Reserves by identifying, investigating and, where appropriate, acquiring tenement holdings in West Africa through direct application to government authorities, joint venture activities or acquisition from existing holders.

OVERALL FINANCIAL PERFORMANCE OF THE COMPANY

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

The Company reports its financial results in Australian dollars (AUD or $). However, the Company’s costs and funding are currently incurred in several currencies including AUD, United States dollars (USD), Canadian dollars (CAD), Ghanaian New 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 and development 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 or development 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 ON OPERATING RESULTS

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

Operating Results1 for the three months ended Mar 31 2012 Dec 31 2011 Sept 30 2011	Jun 30 2011 Mar 31 2011 Dec 31 2010 Sept 30 2010 Jun 30 2010
Total income 60.960 7.549 3.067 Net profit / (loss) 19.722 12.907 0.779 Basicprofit /(loss) per share(cents) 4.41 2.96 0.18	0.315 0.581 0.739 0.897 4.353 (5.097) (3.653) (30.083) (12.343) 3.186 (1.38) (0.73) (7.07) (2.93) 1.16
1All amounts shown above are in millions of dollars except as otherwise indicated

On 1 January 2012, the Company commenced commercial gold production from the EGM resulting in a significant change in the nature of the operating results recorded by the Company in comparison to operating results recorded in prior periods. As a consequence of commencing commercial production, and in contrast to preceding periods (including the March 2011 Quarter) the operating results for the March 2012 Quarter included revenue earned from the sale of precious metals ($66.374 million) less the cost of the goods sold ($31.090 million). In addition the result includes interest income (March 2012 Quarter: $0.226 million; March 2011 Quarter: $0.507 million), depreciation and amortisation (March 2012 Quarter: $5.500 million; March 2011 Quarter: $0.062 million), administration and corporate overheads (March 2012 Quarter: $4.508 million; March 2011 Quarter: $4.643 million) and foreign exchange movements. In the March 2012 Quarter a foreign exchange loss ($5.640 million) was incurred (March 2011 Quarter: $0.419) that arose from a devaluation of the USD relative to the AUD during the period (March 31, 2012:1.0387; December 31, 2011: 1.0176).

As referenced above, due to the commencement of commercial production at EGM the Company’s results for the nine months ended March 31, 2012 (Net profit: $33.408 million and basic profit per share of 7.55 cents) differ to those of the corresponding period ending March 31, 2011 (Net loss: $46.079 million and basic loss per share of 10.73 cents) to the extent that during the prior period revenues mainly comprised interest income and its expenses mainly comprised administration and corporate overheads (given the Company’s accounting policy to capitalise pre-operations, development, exploration and evaluation expenditure prior to the commencement of commercial production.) During the nine months ended March 31, 2012 a foreign exchange gain of $4.313 million has been earned (Nine months ended March 31, 2011: loss of 9.214 million) reflecting an appreciation of the USD relative to the AUD during the period (March 31, 2012:1.0387; June 30, 2011: 1.0597). A hedge loss of $0.215 million incurred during the nine months ended March 31, 2012 contrasts with a hedge loss of $23.185 million incurred during the corresponding period ended March 31, 2011 following the inception of hedge accounting during that period. Furthermore, there was a devaluation of gold put options by $0.033 million during the nine months ended March 31, 2012 compared to a devaluation of $6.654 million in the corresponding period ended March 31, 2011.

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:	Mar 31	Dec 31	Sept 30	Jun 30	Mar 31	Dec 31	Sept 30	Jun 30
	2012	2011	2011	2011	2011	2010	2010	2010
Cash and cash equivalents	117.120	131.455	53.561	96.462	68.038	88.796	130.213	185.591
Total Assets	531.544	507.721	407.739	382.598	312.433	300.718	309.447	346.792
Total Liabilities	201.204	196.120	207.815	170.213	82.481	64,755	14.340	25.862
Net Assets	330.340	311.601	199.924	212.385	229.951	235.963	295.107	320.930

1All amounts shown are in millions of dollars

Total Assets

Total assets have increased in the March 2012 Quarter by $23.823 million and in the nine month period since June 30, 2011 by $148.946 million. The March Quarter increase is due to an increase in non-current assets of $26.004 million offset by a decrease in current assets of $ 2.181 million. The increase in Total assets relative to June 30, 2011 reflects an increase of $ 66.292 million in current assets as well as an increase of non-current assets of $82.655 million. Details of movements in specific accounts follow.

Cash and cash equivalents

As at March 31, 2012 the Company had available cash or cash equivalent resources of $117.120 million plus a further $2.164 million of restricted funds on deposit securing environmental obligations and an international trade facility. This cash balance represents a decrease relative to the position as at December 31, 2011 ($131.455 million plus restricted cash of $2.209 million) but an increase in cash resources relative to the position as at June 30, 2011 ($96.462 million

plus restricted cash of $2.881 million). The decrease in cash reserves of $14.335 million during the March 2012 Quarter is discussed in some detail in the “Discussion on Cash flows ” . The increase in cash reserves of $20.658 million during the nine month period ended March 31, 2012 is due in the main to the receipt of proceeds from a capital raising that occurred during the December 2011 Quarter (refer to the discussion on “Liquidity and Capital Resources” below) and from the sale of gold during the period offset by payments associated with the development and operation of the EGM, development at TGP, purchase of other fixed assets and equity investments and payments for exploration and administration activities.

Receivables

At March 31, 2012 the Company’s current receivables were $15.560 million (December 31, 2011: $10.152 million; June 30, 2011: 8.547 million) while non-current receivables amounted to $22.366 million (December 31, 2011: $18.973 million; June 30, 2011: 3.631million). The increase in current receivables during the March 2012 Quarter is as a result of increased gold sales while the increase in non-current receivables in this period is due to an increase in a VAT refund from the Ghana Internal Revenue Service. During the nine month period since June 30, 2011 the VAT refund from the Ghana Internal Revenue Service has been reclassified from current to non-current receivable. The overall increase in receivables during this period is the result of an increase in gold sales and an increase in the VAT refund due from the Ghana Internal Revenue Service.

Inventory

At March 31, 2012 the Company held inventories of $36.912 million (December 31, 2011: $31.803 million; June 30, 2011:$0.428 million). The net increase in inventory during the March 2012 Quarter ($5.109 million) is mainly as a result of an increase in ore stockpiles offset by a decrease in the value of bullion on hand. On a year to date basis, the increase in inventory of $36.484 million since June 30, 2011 is as a result of the ramping up of mining and processing activities being undertaken at EGM giving rise to ore stockpiles, gold in circuit, bullion on hand and materials and supplies.

Property, plant and equipment

At March 31, 2012, the Company recognised on its balance sheet a total of $265.744 million for property, plant and equipment (“PP&E”) (December 31, 2011: $230.088 million; June 30, 2011: $228.480 million). The Company capitalised $12.151 million of expenditure on PP&E during the March 2012 Quarter before expensing depreciation and amortisation of $5.500 million. During the March 2012 Quarter, an amount of $33.536 million which relates to the TGP has been reclassified from exploration and evaluation expenditure to PP&E. Due to the devaluation of the USD against AUD referred to above, a $4.531 million foreign exchange loss was recorded against PP&E during the March 2012 Quarter as the majority of these assets are recorded in USD in the subsidiary companies’ accounts and are translated into AUD on consolidation. During the nine month period since June 30 2011, $4.362 million of expenditure on PP&E has been capitalised and $5.627 million of depreciation and amortisation has been expensed. In addition, $33.536 million relating to the TGP was reclassified from exploration and evaluation to PP&E, as mentioned above, and the net appreciation of the USD against AUD during the period referred to above gave rise to $4.475 million foreign exchange gain being recorded against PP&E.

Exploration and evaluation expenditure

At March 31, 2012 the Company recognised mineral interest acquisition and exploration expenditure of $24.778 million on its Balance Sheet. (December 31, 2011: $47.664 million; June 30, 2011: $32.246 million). The Company capitalised $10.656 million of exploration and evaluation expenditure incurred on its Ghanaian and Ivorian exploration tenements during the March 2012 Quarter ($27.737 million in the nine month period from June 30, 2011) before recording a foreign exchange loss of $0.006 million in the March 2012 Quarter and a $1.668 million loss in the nine month period from June 30, 2011. In addition, as mentioned above, $33.536 million relating to the TGP was reclassified from exploration and evaluation to PP&E during the March 2012 Quarter.

Other assets

At March 31, 2012 the Company recognised prepayments of $5.128 million on its balance sheet. (December 31, 2011: $3.561 million; June 30, 2011: $3.081million). The increase in prepayments during the three months and nine months ended March 31, 2012 reflects the increased commercial activity associated with the EGM.

Total Liabilities

As at March 31, 2012, the Company had liabilities totalling $201.204 million compared to $196.120 million at December 31, 2011 and $170.213 million at June 30, 2011. The change in total liabilities during the March 2012 Quarter is principally the result of an increase in current liabilities ($11.221 million) offset by a smaller decrease ($6.137 million) in non-current liabilities. In the nine month period since June 30, 2011 the changes in total liabilities are attributable to increases in current liabilities of $51.733 million offset by a decrease in non-current liabilities of $20.742 million. Details of movements in specific accounts follow.

Payables

During the March 2012 Quarter, amounts owed to creditors, relating mainly to the construction and operation of the EGM, increased to $38.300 million from a total outstanding at December 31, 2011 of $32.997 million and at June 30, 2011 of $28.637 million. The Quarterly increase reflected a slight increase in the volume of creditors and also an administrative delay in the timing of processing of outstanding invoices.

Provision

A provision of at $6.667 million as at March 31, 2012 for future rehabilitation work relating mainly to old and new mining activity at EGM, remained relatively unchanged from the $6.717 million that was provided for at December 31, 2011 (June 30, 2011:$4.462 million). The change during the nine month period ended March 31, 2012 reflects an increase in the area requiring rehabilitation as a result of increased mining activity during the period.

Derivative financial instruments

As at March 31, 2012 the Company held forward sales contracts for 210,000 ounces of gold and recorded a liability of $86.883 million (December 31, 2011: 230,000 ounces of gold with a recorded liability of $74.996 million; June 30, 2011: 230,000 ounces of gold with a recorded liability of $59.310 million) on its balance sheet. These contracts were designated as effective hedge contracts beginning October 1, 2010. The movement in mark-to-market value has been recorded as equity while $37.079 million (December 31, 2011: $28.453 million; June 30, 2011: $10.838 million) of the liability has been classified as a current liability as these forward contracts settle within twelve months of the date of this MD & A; the balance of $49.803 million (December 31, 2011: $46.544; June 30, 2011: $48.472) has been classified as a non-current liability. The liability in each case reflects the difference in value of the hedge contracts on the respective balance dates relative to the value of the contracts on the date of inception of hedge accounting.

Borrowings

The decrease in total borrowings at March 31, 2012 ($69.354 million) relative to December 31, 2011 ($81.410 million) is largely the result of the first scheduled debt repayment of US$11.0 million on March 30, 2012 and a decrease in the AUD equivalent value of the outstanding USD denominated borrowings due to the appreciation of the AUD against the USD during the March 2012 Quarter as described above. The decrease in liabilities during the nine months since June 30, 2011 can be attributed to similar factors to those that applied to the decrease in the March 2012 Quarter, except that the impact of foreign exchange movements on the AUD equivalent value of the debt differs due to a devaluation of the AUD against the USD in this nine month period as described 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	Mar 31	Dec 31	Sept 30	Jun 30	Mar 31	Dec 31	Sept 30	Jun 30
three months ended	2012	2011	2011	2011	2011	2010	2010	2010
Operating activities	25.163	(1.829)	(1.908)	(1.622)	(1.977)	(1.131)	(1.096)	(1.345)
Investing activities	(26.206)	(6.857)	(46.579)	(52.249)	(19.108)	(40.328)	(49.282)	(37.090)
Financing activities	(8.240)	85.010	2.343	81.689	0.789	1.997	4.803	134.280

1All amounts shown are in millions of dollars

Before considering the effects of foreign exchange movements, the Company’s cash balance decreased by $9.282 million during the March 2012 Quarter while in the corresponding period in 2011 cash decreased by $20.296 million.

Operating activities , during the March 2012 Quarter, resulted in total cash receipts of $51.330 million from the sale of precious metals produced at the EGM and $0.222 million from bank interest that were offset by administration expenses and production expenses at EGM of $26.389 million, giving a net cash inflow for Operating Activities during the period of $25.163 million. This net cash inflow was $27.140 million more than the corresponding amount in March Quarter in 2011 when net outflows associated with Operating Activities totalled $1.977 million. In the March 2011 Quarter, the EGM had not commenced production as construction was still in progress and therefore no precious metals were available for sale and similarly no operating costs were incurred. Interest received in the March 2011 Quarter was $0.482 million and the costs of administration activities were $2.459 million.

Investing activities during the March 2012 Quarter included pre-commercial production cash receipts capitalised to development of $9.261 million from the sale of precious metals produced at the EGM offset by development expenses at EGM and TGP of $26.006 million, payments for exploration activities in Ghana and Cote d’Ivoire of $7.319 million, investment in fixed assets of $0.997 million, advances to third parties of $0.169 million and financing costs of $0.976 million, that generated a net cash outflow of $26.206 million. In the corresponding quarter in 2011, investing activities included development of EGM ($17.726 million), exploration associated with the EGM and TGP ($1.000 million), investment in fixed assets ($0.729 million), investment in associates ($1.800 million), financing costs ($0.471 million)

offset by funds received for security deposits and bank guarantees, and resulted in a net cash outflow associated with investing activities of $19.108 million

Financing activities in the March 2012 Quarter gave rise to a net cash outflow of $8.240 million. During the Quarter, the first scheduled debt repayment of US$11.0 million to lenders of the project debt facility occurred giving rise to a payment of $10.577 million which was offset by a cash inflow of $2.401 million when options to acquire ordinary shares in the Company were exercised. By contrast during the March 2011 Quarter, $0.789 million of cash was generated by the exercising of options to acquire ordinary shares in the Company. No other financing activities occurred during this period.

LIQUIDITY AND CAPITAL RESOURCES

As at March 31, 2012 the Company’s cash and cash equivalents amounted to $117.120 million (December 31, 2011 $131.455 million; June 30, 2011: $96.462).

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

On November 2, 2011, the Company completed an offering of 25 million ordinary shares at a price of CAD 3.25 per ordinary share for aggregate gross proceeds of CAD 81,250,000 pursuant to a short form prospectus dated October 26, 2011. Further gross proceeds of CAD 12,187,500 were received by the Company on November 14, 2011 upon the issue of an additional 3.75 million ordinary shares at a price of CAD 3.25 per share pursuant to the closing of an overallotment option which was exercised on November 9, 2011. The Company intends to use the net proceeds of this offering together with surplus cash flow generated by operating activities at the EGM, for development of the Sissingué Gold Project that as previously stated, is estimated to have an initial capital cost of USD 115 million.

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

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

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

The project debt facility agreement (the “Facility Agreement”) contains covenants and imposes restrictions on the Company’s ability to complete certain transactions. For example, the Facility Agreement requires that the Company maintain certain financial ratios and prohibits the Company from incurring additional indebtedness or entering into hedging arrangements beyond that specifically permitted. The Facility Agreement also contains (i) certain conditions precedent to the drawing down of funds, which were either satisfied or waived, and (ii) certain conditions subsequent, some of which remain outstanding. The Company has previously received waivers of breaches of, and extensions for satisfaction of, non-financial conditions to the Facility Agreement. In particular, the Company has received waivers in respect of breaches of, and extensions to the time required for satisfaction of, the conditions subsequent that: (i) the

Company enter into a term sheet in respect of a power supply agreement for the Edikan Gold Mine on or before December 31, 2011 (as extended); (ii) the Company use its best endeavours to complete a reorganization of its subsidiaries by December 31, 2011 (as extended); (iii) the Company grants additional security in favour of the lenders by December 31, 2011 (as extended) in the event the reorganization has not been completed by then; (iv) there is parliamentary ratification of the Edikan mining leases and stability agreement by December 31, 2011 (as extended); (v) satisfactory metallurgical test work shall have been completed at the Fetish and Esuajah North resources by November 30, 2011 (as extended); and (vi) the Company execute a foreign exchange retention account agreement with the Republic of Ghana, the Bank of Ghana, the lenders and a financial institution in Ghana by December 31 2011 (as extended). While the Company is currently in compliance with the terms of the Facility Agreement and believes it will be able to satisfy the foregoing conditions subsequent in the prescribed time, it may require one or more waivers or extensions from the lenders in the future. A breach by the Company of certain provisions of the Facility Agreement, unless waived, will constitute an event of default, entitling the lenders to accelerate the payment of amounts due there under. The project loan is effectively secured by all (or substantially all) of the Company’s interest in the Edikan Gold Mine. An obligation to repay the amount owing under the project loan before its stated maturity could have an adverse effect on the Company and its financial position.

As at March 31, 2012, a total of 210,000 ounces of gold had been hedged under gold forward sale contracts for settlement from June 2012 to December 2014 at an average sale price of US$1,253 per ounce. The inception of this hedging was a pre-requisite for Perseus to be able to draw the full US$85 million debt facility in the June 2011 quarter. This hedging represents about 34% of expected production from EGM to the end of 2014 and approximately 6% of current Mineral Reserves estimate at EGM. In addition, options granting Perseus the right but not the obligation to sell 87,500 ounces of gold at US$850 per ounce in the period from April 2012 to December 2013 were purchased as part of the Company’s financial risk management strategy.

As at the date of this MD&A the Company had no material commitments for future capital expenditure over and above those that arise in the normal course of business. In future quarters, subject to achieving satisfactory progress on the permitting of the TGP, commitments for capital expenditure associated with the development of the TGP, whose cost is currently estimated as US$115 million, may be incurred. As noted above, the Company intends to use its existing cash reserves to partly fund the development of the TGP. The balance of the capital required to meet future commitments associated with the development of the TGP will be drawn from a mix of existing cash resources and cash generated from the EGM operation. There are no known trends or expected fluctuations that are expected to change the mix of funds used for this purpose.

COMMITMENTS

The following table sets forth information regarding the Company’s contractual obligations as at March 31, 2012. The Company has no long term debt, finance lease obligations, operating leases or purchase obligations except as indicated below.

	Less than 1	1 - 3 Years	4 - 5 Years	After 5 years
	Year
Exploration expenditure1(US$M)	1.050	0.700	0.700	0.950
Debt Repayment obligations (US$M)(2)	38.000	36.000	-	-
Rent ofcorporate premises	0.302	0.905	0.302	-
Total (US$M)	39.352	37.605	1.002	0.950
Notes:

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

(2) Represents repayments of the project loan facility which are scheduled to occur on or about the end of each ensuing quarter, with the final payment due on 30 September 2014. As a pre-requisite for drawing down the loan, PMGL, entered into gold hedge contracts with the lenders for 230,000 ounces of gold during the period from March 2012 to December 2014. The contracts are settled on a quarterly basis. A total of 210,000 ounces remain to be delivered under forward sales contracts at contracted weighted average delivery price of US$1,253 per ounce.

FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS

The principal financial instruments used by the Company as at March 31, 2012 are cash, receivables, payables and prepayments. As a result of the use of these financial instruments, the Company is exposed to credit risk, liquidity risk and market risk.

Credit Risk

Credit risk represents the loss that would be recognised if counterparties failed to perform as contracted under a financial instrument resulting in a financial loss to the Company and arises from deposits with banks and financial

institutions, favourable derivative financial instruments as well as credit exposures to customers including outstanding receivables and committed transactions. There has been no significant change in the Company’s exposure to credit risk or its objectives and policies for managing these risks during the March 2012 Quarter.

Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’s approach to managing liquidity is to ensure, that as far as possible, it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the group’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 group enters into forward commodity price derivatives, details of which are discussed in “Liquidity and Capital Resources” above.

The Company operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US dollar. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the entity’s functional currency. The risk is measured using sensitivity analysis and cash flow forecasting. The Company is also exposed to foreign exchange risk arising from the translation of its foreign operations, the Company’s investments in its subsidiaries are not hedged as those currency positions are considered to be long term in nature. There has been no significant change in the Company’s exposure to currency risk or its objectives and policies for managing these risks during March 2012 Quarter. The Company’s main interest rate risk arises from long-term borrowing through its project loan facility which is based on three month LIBOR. Borrowings issued at variable rates expose the group to cash flow interest rate risk. During the March 2012 Quarter the Corporation’s borrowings at variable rate were denominated in US dollars. The Corporation has not entered into any hedge/interest rate swap instruments to manage interest rate risk exposure. There has not been a change in the Company’s exposure to interest rate risk during the March 2012 Quarter compared to the December 2011 Quarter. The Company’s objectives and policies for managing these risks have not changed during the March 2012 Quarter.

OFF BALANCE SHEET ARRANGEMENTS

There are no off-balance sheet arrangements as at March 31, 2012.

TRANSACTIONS WITH RELATED PARTIES

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

Rent, accounting, secretarial and corporate service fees paid or payable to Corporate Consultants Pty Ltd (“CCPL”), a company in which a Director, Mr Gillard, and the company secretary, Mr Susmit Shah, have beneficial interests, totalled $108,124 during the March 2012 Quarter compared to $74,411 in the corresponding quarter ending March 31, 2011.

During the March 2012 Quarter the Company also leased office space in a building that is owned by a syndicate of investors which includes Mr Gillard. During the June 2012 Quarter, the Company’s lease with the syndicate will be terminated and the Company will move to new premises that are leased from a party that is not related to the Company.

Aside from this lease of property which is due to be terminated in the June 2012 Quarter, the Company has no ongoing contractual or other commitments arising from transactions with and of the related parties referred to above.

CRITICAL ACCOUNTING ESTIMATES

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

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

(i) Exploration and evaluation expenditure

In accordance with accounting policy note 1(n) in the June 2011 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 2011 Financial Report, in determining whether the recoverable amount of each cash generating unit is the higher of fair value less costs to sell or value-in-use against which asset impairment is to be considered, the Company undertakes future cash flow calculations which are based on a number of critical estimates and assumptions including, for its assets under construction, forward estimates of:

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

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

(iii) Share-based payment transactions

The Company measures the cost of equity-settled transactions with employees and directors by reference to the fair value of the equity instruments as at the date at which they are granted. The Company measures the cost of cash-settled share-based payments at fair value at the grant date using the Black-Scholes option pricing model and taking into account the terms and conditions upon which the instruments were granted. Differences in estimated future stock price volatility, interest rates and other factors can have a material effect on the calculation of share-based compensation expense and derivative values. As such, the values derived may change significantly from period to period and are subject to significant uncertainty. The Company recorded a total share-based compensation expense of $0.622 million for the Quarter ended March 31, 2012. The expense for the December 2011 Quarter was $0.675 million compared with $0.661 for the September 2011 Quarter, $2.439 million for the June 2011 Quarter, $1.102 million for the March 2011 Quarter, $2.693 for the December 2010 Quarter, $1.152 million for the September 2010 Quarter and $1.181 million for the June 2010 Quarter.

(iv) Restoration and rehabilitation provisions

As set out in accounting policy note 1(t) in the June 2011 Financial Report, the value of the current restoration and rehabilitation provision is based on a number of assumptions including the nature of restoration activities required and the valuation at the present value of a future obligation that necessitates estimates of the cost of performing the work required, the timing of future cash flows and the appropriate discount rate. Additionally current provisions are based on the assumption that no significant changes will occur in either relevant Federal or State 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 2011 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 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.

(vii) Commercial production

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

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

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

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

The 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.

(ix) Deferred stripping expenditure

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

CHANGES IN ACCOUNTING POLICIES INCLUDING INITIAL ADOPTION

In the March 2012 Quarter, the Company reviewed all of the new and revised Standards and Interpretations issued by the AASB that are relevant to its operations and effective for annual reporting periods beginning on or after 1 July 2011. As a result of this review the Directors have determined that there is no change necessary to the Company’s accounting policies and in particular no new accounting policies have been adopted during the March 2012 Quarter.

OUTSTANDING SECURITIES DATA

At March 31, 2012 the Company had issued 457,962,088 shares (December 31, 2011: 455,827,088; June 30 2011: 425,617,088) and 4,590,000 options (December 31, 2011: 6,805,000; June 30, 2011: 8,435,000).

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

Ordinary shares 457,962,088 Options over unissued shares 4,590,000

Since March 31, 2012 and up to the date of this MD&A, the Company has issued nil shares upon conversion of the same number of options. No new options have been issued since March 31, 2012 and up to the date of this MD&A.

CONTROLS AND PROCEDURES

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

Disclosure Controls and Procedures

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

As at March 31, 2012, the Chief Executive Officer and Chief Financial Officer, with participation of the Company’s management, concluded that there were no material weaknesses in the design of DCP at that date or changes to the Company’s DCP during the March 2012 Quarter which have materially affected, or are considered to be reasonably likely to materially affect, the Company’s disclosure or its DCP.

Internal Controls over Financial Reporting

Internal controls over financial reporting (“ICFR”) are designed to provide reasonable assurance regarding the reliability of the Company’s financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. The Board is responsible for ensuring that management fulfils its responsibilities in this regard. The Audit Committee is in turn responsible for ensuring the integrity of the reported information through its review of the Company’s interim and annual financial statements. There has been no change in the Company’s ICFR during the March 2012 Quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. As at March 31, 2012, the Chief Executive Officer and Chief Financial Officer, have concluded that there is no material weakness relating to the design of the Company’s ICFR.

Limitations of Controls and Procedures

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

The Company’s Chief Executive Officer and Chief Financial Officer have not limited the scope of their design of DCP and ICFR to exclude controls, policies and procedures of any proportionately consolidated entity, variable interest entity or business acquired within the preceding 365 days.

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

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

Forward-looking information is based on assumptions, estimates, analysis and opinions of management made in light of its experience and its perception of trends, current conditions and expected developments, as well as other factors that management of the Company believes to be relevant and reasonable in the circumstances at the date that such statements are made, but which may prove to be incorrect. Assumptions have been made by the Company regarding, among other things: the price of gold, continuing commercial production at the Edikan Gold Mine without any material disruption, the receipt of required governmental approvals, the accuracy of capital and operating cost estimates, the ability of the Company to operate in a safe, efficient and effective manner and the ability of the Company to obtain financing as and when required and on reasonable terms. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which may have been used by the Company. Although management believes that the assumptions made by the Company and the expectations represented by such information are reasonable, there can be no assurance that the forward-looking information will prove to be accurate.

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

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

RISK FACTORS

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

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

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

TECHNICAL DISCLOSURES

The information in this report that relates to exploration results, mineral resources or ore reserves is based on information compiled by Mr Mark Calderwood, who is a Chartered Professional Member of The Australasian Institute of Mining and Metallurgy. Mr Calderwood is a Director and full-time employee of the Company. Mr Calderwood has sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking, to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’”) and to qualify as a “Qualified Person” under National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”). Mr Calderwood consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.

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

AI assistant

PERSEUS MINING LIMITED — Management Reports 2012

46513_rns_2012-05-13_de062c1b-0133-4142-b0f7-18750ebf82ba.pdf

May 11, 2012

MANAGEMENT’S DISCUSSION & ANALYSIS For the three months ended March 31, 2012

COMPANY OVERVIEW

HIGHLIGHTS OF THE MARCH 2012 QUARTER

Edikan Gold Mine

Ghanaian Exploration

Tengrela Gold Project Development

Côte d’Ivoire Exploration

Corporate

OPERATIONS REVIEW

EDIKAN GOLD MINE

Key Quarterly Production Statistics

Mining

Processing

Key Quarterly Financial Statistics

Ghana Exploration

Esuajah North Resource Estimate

EGM, Esuajah North, Measured and Indicated Mineral Resources (>0.8g/t Au)

EGM, Esuajah North, Measured and Indicated Mineral Resources (>0.4g/t Au)

EGM, Esuajah North, Inferred Mineral Resources

Reserve Estimate

TENGRELA GOLD PROJECT

Permitting

Implementation

Development Funding

Exploration

GRUMESA GOLD PROJECT

TOTAL MINERAL RESOURCES AND MINERAL RESERVES

Total Mineral Resources (Including Reserves)

Total Mineral Reserves

Notes

COMPANY OUTLOOK FOR THE QUARTER ENDING JUNE 30, 2012

Edikan Gold Mine

Tengrela Gold Project

Business Development

OVERALL FINANCIAL PERFORMANCE OF THE COMPANY

DISCUSSION ON OPERATING RESULTS

DISCUSSION OF FINANCIAL CONDITION

Total Assets

Cash and cash equivalents

Receivables

Inventory

Property, plant and equipment

Exploration and evaluation expenditure

Other assets

Total Liabilities

Payables

Provision

Derivative financial instruments

Borrowings

DISCUSSION ON CASHFLOWS

LIQUIDITY AND CAPITAL RESOURCES

COMMITMENTS

FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS

Credit Risk

Liquidity Risk

Market Risk

OFF BALANCE SHEET ARRANGEMENTS

TRANSACTIONS WITH RELATED PARTIES

CRITICAL ACCOUNTING ESTIMATES

(i) Exploration and evaluation expenditure

(ii) Impairment of assets

(iii) Share-based payment transactions

(iv) Restoration and rehabilitation provisions

(v) Derivative financial instruments

(vii) Commercial production

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

(ix) Deferred stripping expenditure

CHANGES IN ACCOUNTING POLICIES INCLUDING INITIAL ADOPTION

OUTSTANDING SECURITIES DATA

CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Internal Controls over Financial Reporting

Limitations of Controls and Procedures

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

RISK FACTORS

TECHNICAL DISCLOSURES

PERSEUS MINING LIMITED Management Reports 2012