PERSEUS MINING LIMITED - Management Reports 2014

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May 14, 2014

MANAGEMENT’S DISCUSSION & ANALYSIS For the three months ended March 31, 2014

This Management’s Discussion and Analysis (“MD&A”) of Perseus Mining Limited and its controlled entities (“Perseus” or the “Company”) is dated May 14, 2014 and provides an analysis of the Company’s performance and financial condition for the three months ended March 31, 2014 (the “March 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, 2013 (the “2013 Financial Report”), and the Company’s audit reviewed consolidated financial statements for the half year ended December 31, 2013. 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 current 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 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 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 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 13.1% 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 and has reduced its Available Commitment limit on its US$100 million revolving line of credit to nil as part of a cost reduction program. The Company has a commitment to deliver 129,000 ounces of gold at a weighted average gold price of US$1,463/oz under outstanding gold hedging contracts. (Refer to the section below titled “Liquidity and Capital Resources” ).

OVERVIEW OF THE MARCH 2014 QUARTER

Summary

The trend of improved operating performance at Perseus’s EGM continued during the March 2014 Quarter as indicated by increases in the run time of the SAG mill (88%) and gold recovery (86% in March 2014). Gold production during the Quarter was 43,787 ounces, reflecting an expected short term decrease in the head grade and quantity of ore processed. Total site cost (including production, royalties, development and sustaining capital) was reduced during the Quarter but given the expected reduction in gold production, unit costs increased slightly to US$1,286/oz. Key production statistics for the Quarter are as shown below in Table 1.

Table 1: Key Production Statistics

Parameter	Unit	March	December	September
		Quarter	Quarter	Quarter
		2014	2013	2013
Total material mined	bcm	2,419,626	2,879,791	2,562,917
	tonnes	6,543,278	7,424,205	6,960,972
Waste to ore strip ratio	bcm:bcm	3.6	4.6	2.8
	tonnes:tonnes	3.6	4.4	2.9
Ore mined
 Oxide	tonnes	-	5,614	42,178
 Primary	tonnes	1,426,165	1,365,183	1,747,592
Ore grade mined
 Oxide	g/t gold	-	0.63	1.00
 Primary	g/t gold	1.11	0.99	1.02
Ore stockpiles
 Quantity	tonnes	3,624,825	3,921,802	4,472,546
 Grade	g/t gold	0.55	0.54	0.61
Mill throughput	tonnes	1,723,143	1,791,410	1,628,900
Milled head grade	g/t gold	0.95	1.00	1.05
Gold recovery	%	83.6	84.4	83.4
Goldproduced	ounces	43,787	48,360	45,830

Total ore and waste movement of 2,419,626 bank cubic metres (“bcm”) for the Quarter was nearly 16% less than the December 2013 quarter (the “December Quarter”) of 2,879,791 bcm. Mill head grade at 0.95 g/t was 5% lower than the December Quarter head grade, while recovery of 83.6% was 0.9% lower than the December Quarter recovery. The average mill throughput rate of 902 dry tonnes per hour (“dtph”) was 5% lower than the December Quarter of 954 dtph due to the restriction of power supply which was beyond the control of the Company.

Perseus is completing a review of processing options for Sissingué with the aim of reducing capital costs and increasing gold recoveries cost effectively as a prelude to reassessing the feasibility study model. The Ivorian Government granted Perseus a two year extension to the date for completion of the Sissingué development, and has also introduced a new Mining Code providing sound framework for obtaining fiscal stability for mining projects in the country. Drilling of 2,094m was completed in Côte d’Ivoire during the Quarter. Assays from the December Quarter drilling resulted in significant drill intercepts from multiple prospects at the Mahalé licence.

As at March 31, 2014 Perseus had an available cash balance of $42.5 million (excluding $10.2 million in escrow), plus 3,641 ounces of gold on hand or at the refinery valued on that date at $5.1 million. A placement of about 68.7 million ordinary shares, representing 15% of the Company’s existing capital to raise approximately $32 million was successfully completed on 17 February 2014.

Perseus continues to pursue resolution of the outstanding VAT liability of GHS97.5 million (or U$36.5 million) owed to Perseus Mining (Ghana) Limited by the Ghanaian Government.

A fire occurred in the cyclone cluster in the processing plant during routine maintenance following the end of the Quarter. Processing of ore was interrupted for seven days while repairs to fire damage were completed. The seven day shutdown of gold production due to the fire has contributed materially to a change to gold production and subsequently cost guidance for the six months ending June 30, 2014 (“the June Half Year”).

EGM, Ghana

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

Overview

The twelve month period ending June 30, 2014 (“FY2014”) was planned to be a year of consolidation for the EGM, with an external environment of fluctuating gold prices and economic uncertainty in Ghana. The strategy adopted by the Company involved exercising austerity by minimising capital outlays and focussing on productivity improvements and cost reductions.

An element of this strategy entailed reducing waste stripping activities to conserve capital with the consequent effect of deferring access to fresh ore, requiring low grade stockpiled ore to be blended with higher grade fresh ore to achieve targeted mill feed volumes.

The effect of this strategy was evident during the Quarter, as the combined head grade of processed ore fell, as expected, below that of prior quarters. As a result, gold production for the Quarter was down on prior quarters, causing the all-in site unit cost of production to increase slightly. It should be noted that this situation is expected to reverse in the June 2014 quarter as mined grades are forecast to improve.

Mining

A total of 2,419,626bcm of ore and waste was mined during the Quarter, nearly 16% less than in the December Quarter. The ore mined was 1,426,165t of transitional and primary ore at 1.11g/t gold. The quarter-on-quarter decrease in total material movements reflected a 20% decrease in waste movements (associated with less stripping of the AG Stage 3 pit compared with the December Quarter) offset by a 4% increase in the quantity of ore mined relative to the prior period. The reduction in mining rates was consistent with the Company’s plan of conserving capital by reducing investment in waste stripping.

During the Quarter, the ROM ore stockpiles that include both high and low grade ore (but not mineralised waste), plus crushed ore, decreased by 296,977 tonnes to 3,624,825t grading 0.55 g/t gold, containing approximately 63,913 ounces of gold. The reduction in stockpile reflected the plan to process stockpiled ore to offset reduced ore production during this period of planned reduced mining activity. These ore stockpiles were made up of approximately 38% oxide ore and 62% transitional/primary ore. Approximately 6% of the stockpiled ore is classified as medium/high grade, containing greater than 0.6g/t gold, while 94% of the ore is classified as low grade containing 0.4 to 0.6 g/t gold.

Processing

Total mill throughput for the Quarter was 1,723,143t down 4% on throughput in the December Quarter and up 6% relative to the September 2013 Quarter. The decrease in throughput was largely the result of a deliberate strategy of reducing mill weight to counter the impact of restricted grid power supply while maintenance of power generation equipment was conducted by the state owned power generating authority. Gold production of 43,787 ounces during the Quarter was 9.5% below the December Quarter production, mainly as a result of the head grade of ore treated (0.95 g/t gold) and the throughput being lower on a quarter-on-quarter basis. The 5% reduction in head grade was in line with expectations and was a reflection of the strategy of processing a blend of ore drawn from stockpiles and the existing open pits in FY2014.

Plant runtime of 88% during the Quarter was higher than in the December Quarter (85%) reflecting a continued improvement in maintenance performance. Given the challenges presented by unreliable power supply during the Quarter, this was a very credible performance.

The average gold recovery rate during the Quarter of 83.6% was 0.9% below the rate of 84.4% achieved in the December Quarter. This reflected poor recovery achieved in January 2014, when an unsuccessful trial of a key (lower cost) consumable was conducted. In the months of February (83.9%) and March (86.1%) recoveries steadily improved as the consumable trial was abandoned and significant improvements in gravity gold recoveries were achieved following modification of the gravity circuit.

Key operating parameters associated with the steadily improving processing operation are summarised below.

Table 2: Plant Performance Statistics - EGM

Description	Unit	March 2014 Quarter	December 2013 Quarter	September 2013 Quarter
SAG Mill
Tonnes Milled	Dmt1	1,723,143	1,791,410	1,628,900
Run Time	%	88%	85%	84%
Run Time	hrs	1,909	1,877	1,863
Throughput rate	dmtph	9022	954	874

Notes: 1. Denotes dry metric tonnes. 2. Directly impacted by restricted power supply which was beyond the control of the Company.

Site Operating Costs

Details of site operating costs for EGM are as follows:

Table 3: Key Quarterly Financial Statistics - EGM

Parameter	Units	March	December	September	June
		Quarter	Quarter	Quarter	Quarter
		2014	2013	2013	2013
Gold produced	ounces	43,787	48,360	45,830	47,565
Total gold sales1	ounces	43,873	44,617	49,069	52,626
Average sales price	US$/oz of gold	1,294	1,318	1,342	1,308
	sold
Mining cost	US$/t material	4.08	3.71	4.16	3.42
	mined
Processing cost	US$/t ore milled	9.94	10.77	11.61	14.42
G & A cost	US$M / month	1.67	1.62	1.63	2.02
All-In Site Cash Cost
Gold Production Cost:
Cash Cost	US$/oz	1,071	1,038	1,252	1,181
Royalties	US$/oz	87	75	92	93
Total production cost	US$/oz	1,158	1,113	1,344	1,274
Capital Costs:
Inventory and Stripping	US$/oz	44	30	(101)	(36)
Other Capital	US$/oz	84	85	99	167
Total capital cost	US$/oz	128	115	(2)	131
Total All-In Site Cost	US$/oz	1,286	1,228	1,342	1,405

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.

Total all-in site unit cash costs (including production, royalties, investment in pre-stripping and inventory, development and sustaining capital) for the Quarter were US$1,286/oz which was 4.7% higher than in the December Quarter, notwithstanding the fact that gold production was 9.5% lower than the December Quarter.

This 4.7% increase in all-in site unit costs between the December Quarter and the March 2014 Quarter belies the fact that the total cost base of the operation continues to decline as indicated by the improvements in the underlying cost of the operation as illustrated below:

Table 4 – Quarter-on-Quarter Changes in Site Costs

Cost		Quarter-on-Quarter Change in:	Quarter-on-Quarter Change in:
	Volume	Unit costs	Total Costs
Mining	-11.9%	+10.0%	-3.0%
Processing	-3.8%	- 7.7%	-11.2%
Cash Production costs	-9.5%	+3.2%	-6.6%
Sustaining & Other Capital	-9.5%	+11.3%	+0.8%
All-in Site Costs	-9.5%	+4.7%	-5.2%

Of the US$84/oz spent on sustaining capital during the Quarter, approximately 50% related to payments associated with community relations activities including crop compensation committed in prior periods for areas that will be affected by mining of the eastern pits and purchase of land for relocation housing. The remaining 50% related to an assortment of expenditure relating to plant upgrades, security and site upgrade projects. This allocation of sustaining capital was very similar to that in the prior quarter.

Subsequent Event – Fire at EGM Processing Plant

On Wednesday April 9, 2014, a fire occurred in the processing plant at the EGM while the plant was shut down for scheduled maintenance. Perseus’s Emergency Response Team was activated and the fire was brought under control within an hour. The fire caused no significant injuries and there was no adverse impact on the environment.

The fire occurred in the upper cyclone area of the process plant (levels above Knelsons and gravity screens). Cyclone Process Equipment and associated support structures and mechanical and electrical installations were damaged, including:

7 of the 10 cyclones were fully burnt externally and internally;
8 cyclone actuator valves were burnt and destroyed;
The rubber lining in the cyclone underflow pipe work and cyclone launder channels was badly burnt and or destroyed;
The cyclone support steelwork suffered fire damage, one large grillage support beam was slightly deformed and many cyclone support channels were badly bent and deformed;
All cyclone junction boxes, cabling, solenoid valves, electrical cabling and air pipe work in the vicinity were destroyed;
Consequential damage occurred to PLC fuses due to short circuits from the fire.

As soon as practical following receipt of approval by the Ghana Minerals Commission, work commenced on clearing debris and carrying out repairs to the damaged equipment and structures. All of the materials and equipment required to complete the repairs were either held in stock or could be acquired or borrowed locally which meant that repairs were not impeded by supply issues.

Repairs including testing and preparations to enable re-starting the plant were completed and the plant re-started at 17.00hrs GMT on Wednesday April 16, 2014, seven days after the fire occurred.

Since the restart of processing operations, the plant has been running approximately 92% of the time and while some minor problems have been encountered with the operation of the cyclones which has impacted gold recoveries, the plant was operating at pre-fire performance levels by the end of April 2014.

EGM Production and Cost Guidance

Following a comprehensive assessment of the consequences of the fire in the processing plant including the ramp up to full production following re-start plus the impact of restrictions on power supply during the months of March and early April 2014 due to maintenance works conducted by the state owned electricity supplier, GridCo, production and cost estimates for the six and twelve month periods ending June 30, 2014 have been revised to the following:

Table 5: Modified June 2014 Half Year and Full Financial Year 2014 Production and Cost Guidance

Parameter	Units	Six Months to	Twelve Months to
		June 30, 2014	June 30, 2014
Gold Production	ounces	89,000 - 99,000	183,200-193,200
All-In Site Cash Costs	US$/oz	1,150 – 1,300	1,200 – 1,300

This represents a decrease in forecast gold production of approximately 10% and an increase in all-in site unit costs of approximately 7%.

Personnel Changes at EGM

Mr Edwin Acquaye, the General Manager Sustainability at the EGM has been appointed in an acting capacity to the role of Executive General Manager of the mine following the resignation of Mr Jon Yelland during the Quarter.

An international search for a new Executive General Manager with high level management and technical skills and a successful track record of operating in West Africa is at an advanced stage and an announcement regarding the new appointment is expected to be made shortly.

During the Quarter, 120 of Perseus’s employees from departments across the EGM were made redundant. At the end of the Quarter, the total direct workforce employed by Perseus at the EGM was 365 including both local and expatriate employees, while a further 1,199 employees were employed by contractors, bringing the total number of people employed on the site to 1,564.

Gold Sales and Price Hedging

Of the 43,873 ounces of gold sold during the Quarter (December Quarter: 44,617 ounces) at a weighted average delivered price of US$1,294/oz, a total of 8,000 ounces were delivered into forward sales contracts at an average price of US$1,269/oz, with the remaining gold sales occurring at prevailing spot prices.

As at March 31, 2014, Perseus had a total outstanding hedge commitment of 129,000 ounces of gold deliverable up to and including 31 December 2015 at a weighted average price of US$1,463/oz. This includes a total of 70,000 ounces of gold deliverable in quarterly instalments during the 2015 calendar year at an average price of US$1,600/oz.

The total hedge position was “in the money” to the extent of US$24.4M as at March 31, 2014. In the June 2014 Quarter, 8,000 ounces of gold is scheduled for delivery at an average price of US$1,278/oz under the hedge programme.

VAT Receivable

During the December Quarter, Perseus mandated a Ghanaian legal firm that specialises in revenue law, to intervene directly with the government on Perseus’s behalf. This approach has so far yielded the following results:

The Ghana Revenue Authority issued Perseus with GHC60 million of Treasury Credit Notes (TCNs) to cover the part of the obligation that has been formally audited and signed off. To date approximately GHS8.987 million (USD 3.365 million) of charges have been offset against the TCNs.
Following further discussions with the Finance Minister aimed at obtaining a cash settlement of the full liability as a substitute for TCNs, the Finance Minister issued a written instruction on March 24, 2014 to the Controller and Accountant General to immediately pay Perseus the sum of GHC 49.649 million (USD 18.595 million). Since the instruction was issued and bank details were provided to the Finance Department, no payment has occurred.
The Finance department has requested that given that payment of a proportion of the outstanding liability is pending, Perseus should cease using TCNs as a means of offsetting tax payments that are due and instead should defer payment of the various taxes which currently total approximately GHC10.522 million (USD 3.939 million).
A further audit of outstanding VAT payments was completed and approved by the tax authorities during the Quarter and at the date of this report, the outstanding VAT position was as follows:

	GHS Million	USD Million*
Approved VAT claims	103.519	38.757
VAT claims pending audit	10.386	3.889
Less: Cash Refunds received to date	7.400	2.771
Less: Offsets using TCNs	8.987	3.365
VAT Refunds Due and Payable	97.518	36.510
Less: Statutory Tax payments deferred	10.522	3.939
Balance Due for payment	86.996	32.571

*Assumes USD1.00=GHS2.67 as at March 31, 2014

EGM Mineral Resource Estimate

The Company’s Measured and Indicated Mineral Resource base at EGM is 5.7M ounces of gold and the Inferred Mineral Resource base is 2.4M ounces and is tabulated below in Tables 6 and 7. The Company’s Proven and Probable Mineral Reserves at EGM are as shown in Table 8.

Table 6: M&I Mineral Resources – EGM[1]

Deposit	Measured Resources2	Measured Resources2	Indicated Resources2	Indicated Resources2	Measured + Indicated Resources
	Quantity Grade Mt g/t gold	Gold Ounces	Quantity Grade Mt g/t gold	Gold Ounces	Quantity Grade Gold Mt g/t gold Ounces
Abnabna/AFGap/Fobinso3 Esuajah South Esuajah North Fetish Chirawewa Bokitsi Mampong Dadieso	42.9 1.1 9.5 1.8 16.9 0.9 12.9 0.9 - - - - - - - -	1,529,000 546,000 494,000 388,000 - - - -	27.7 0.9 7.3 1.6 18.4 0.8 18.5 1.1 5.8 1.1 2.6 2.6 - - - -	789,000 370,000 493,000 677,000 197,000 213,000 - -	70.6 1.0 2,318,000 16.8 1.7 916,000 35.3 0.9 987,000 31.4 1.1 1,065,000 5.8 1.1 197,000 2.6 2.6 213,000 - - - - - -
Total	82.2 1.1	2,957,000	80.3 1.1	2,739,000	162.5 1.1 5,696,000

1 Based on June 2013 Resource estimation.

2 Last updated in July 2013.

3 Last updated in July 2013 and allows for mining depletion to April 30, 2013.

Table 7: Inferred Mineral Resources – EGM[1]

Deposit	Inferred Resources2	Inferred Resources2
	Quantity Grade Mt g/t gold	Gold Ounces
Abnabna/AFGap/Fobinso3 Esuajah South Esuajah North Fetish Chirawewa Bokitsi Mampong Dadieso	30.5 0.8 5.7 1.1 3.6 0.9 10.0 1.1 10.5 0.9 3.0 1.8 8.8 0.9 5.3 1.5	782,000 211,000 105,000 353,000 288,000 174,000 264,000 253,000
Total	77.4 1.0	2,430,000

Based on June 2013 Resource estimation.
0.4g/t gold cut-off applied. 3. Last updated in July 2013 and allows for mining depletion to April 30, 2013.

EGM Mineral Reserve Estimate

Mining consultant RungePincockMinarco completed an independent estimate of the Mineral Reserves for the EGM as at July 1, 2013 in accordance with the requirements of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code, 2004 Edition).

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

Table 8: Mineral Reserves – EGM[1]

Deposit	Proved Reserves2	Probable Reserves2	Proved & Probable Reserves	W: O Ratio3
	Quantity Mt Grade g/t gold Gold ‘000 Ounces	Quantity Mt Grade g/t gold Gold ‘000 Ounces	Quantity Mt Grade g/t gold Gold ‘000 Ounces
AF Gap4 Fobinso4 Fetish Esuajah South Esuajah North Chirewewa Bokitsi ROM Stockpiles	21.6 1.2 806 8.0 1.1 290 7.8 0.9 224 5.9 1.7 327 11.8 0.9 354 - - - - - - 4.4 0.6 89	5.9 0.8 148 1.3 1.0 39 6.1 1.1 219 1.0 1.8 55 3.9 0.9 111 2.9 1.1 106 2.1 2.3 158 - - -	27.5 1.1 954 9.3 1.1 330 13.9 1.0 442 6.9 1.7 382 15.7 0.9 465 2.9 1.1 106 2.1 2.3 158 4.4 0.6 89	2.3 3.3 2.1 8.1 1.4 3.9 6.3 -
Total	59.6 1.1 2,089	23.1 1.1 836	82.7 1.1 2,925	2.7

Based on June 2013 Resource estimation.
Oxide – 0.6g/t cut-off; Transitional – 0.5g/t cut-off; Fresh – 0.4g/t cut-off, regular block.
Inferred mineral resources considered waste.
Last updated in June 2013 and allows for material mined to June 30, 2013.

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 Tengrela South exploration permit area, together referred to as the Tengrela 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 (7.0 Moz) in Mali and 65km west northwest of Randgold’s Tongon deposit (4.3Moz) in Côte d’Ivoire.

Development

Perseus is completing a review of processing options for Sissingué with the aim of reducing capital costs and increasing gold recoveries cost effectively as a prelude to reassessing the feasibility study model. It is expected that a smaller, higher grade operation with significantly reduced capital costs will result. Metallurgical test work is being carried out to assess options including:

A smaller version of the existing crush, grind, CIL process route;
Heap leaching, which appears may work well for oxide ore but results in lower recoveries from sulphide material;
Gravity or gravity and CIL recovery; and
A grind, gravity/flotation, fine grind, then CIL process.

In parallel to the metallurgical studies Perseus is scoping lower cost plant options, including modular equipment. It appears that considerable capital cost savings are achievable by developing a smaller, higher grade project.

Progress at the Ivorian Government level is encouraging. The new mining code which came into effect in March 2014 provides a framework for obtaining fiscal stability for mining projects and the Government has granted Perseus’s request for an extension of time of two years until March 2016 to develop the Sissingué project. Exploration aimed at identifying additional feedstock for the project is in progress on the nearby Mahalé exploration permit and at Papara on the Sissingué exploitation permit.

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

Weathering Domain	Measured Resources	Measured Resources	Measured Resources	Indicated Resources	Indicated Resources	Indicated Resources	Measured +	Indicated	Resources
	Quantity Mt	Grade g/t gold	Gold Ounces	Quantity Mt	Grade g/t gold	Gold Ounces	Quantity Mt	Grade g/t gold	Gold Ounces
Oxides	925,000	1.6	48,000	4,600,000	1.2	171,000	5,520,000	1.2	219,000
Transition	600,000	2.0	39,000	1,300,000	1.3	56,000	1,900,000	1.6	95,000
Fresh	2,700,000	2.5	217,000	8,850,000	1.4	394,000	11,560,000	1.6	611,000
Total	4,225,000	2.2	304,000	14,750,000	1.3	621,000	18,980,000	1.5	925,000

Table 10: Inferred Mineral Resources - SGP

Weathering Domain	Inferred Resources	Inferred Resources	Inferred Resources
	Quantity Mt	Grade g/t gold	Gold Ounces
Oxides	950,000	1.0	31,000
Transition	650,000	1.0	21,000
Fresh	5,400,000	1.4	239,000
Total	7,000,000	1.3	291,000

SGP Mineral Reserve Estimate

Work on the re-design of the SGP open pit based on the current Mineral Resource estimate is underway and will lead to a restatement of Mineral Reserves for the SGP. The current Mineral Reserves for the SGP are as follows:

Table 11: Ore Reserves - SGP

able 11: Ore Reserves	- SGP
Ore type	Proved Reserves	Probable Reserves	Proved & Probable Reserves
	Quantity Mt Grade g/t gold Gold ‘000 Ounces	Quantity Mt Grade g/t gold Gold ‘000 Ounces	Quantity Mt Grade g/t gold Gold ‘000 Ounces
Oxide/Transition Primary	- - - - - -	3.4 2.1 224 6.3 2.1 433	3.4 2.1 224 6.3 2.1 433
Total	- - -	9.7 2.1 657	9.7 2.1 657

Reserve estimated by Coffey Mining using a pit design based on a US$950/oz gold price optimisation.
All Measured and Indicated Mineral Resources in pit designs designated as Probable Ore Reserves, Inferred Mineral Resources considered as waste.
A mining dilution of 5% was applied at a grade of 0.0g/t. In addition, a mining ore loss of 3% was assumed.
The Probable Ore Reserve as estimated in the DFS was estimated at a 0.55g/t gold cut-off.

Exploration

Ghana

During the Quarter, a total of US$0.3M was spent by Perseus on exploration activities in Ghana at the EGM and on adjoining licence areas.

Exploration activities consisted of geological mapping and a soil sampling program to test the strike extension of the Abnabna-Fobinso granite into a neighbouring Prospecting License, the Agyakusu license, which is under option to Perseus. No drilling occurred during the Quarter however limited drilling programs have been planned to commence next quarter which will evaluate several near-mine exploration targets.

Côte d’Ivoire

The Company completed 2,094 metres of drilling in Côte d’Ivoire during the Quarter (28,568 metres December Quarter). Geological mapping and sampling was conducted on the Tengréla East licence during the Quarter.

Mahalé License, Côte d’Ivoire

During the Quarter, the balance of outstanding assays of samples from the December Quarter drilling program at the Bélé prospect (located on the Mahalé licence) were received. Significant drill intercepts are listed below. The mineralization at the Bélé West, Bélé Central and Bélé East prospects remains largely open-ended on strike and at depth.

A total of 362 auger drill holes for 2,094 metres (28,568 metres in December Quarter) were drilled during the Quarter on the Mahalé licence. The auger drilling is being conducted to test several areas of gold in lag geochemical anomalism located 5 to 7 km north and east of the Bélé prospect. Assay results are pending.

Drill testing undertaken to date has been to relatively shallow (<80 metres vertical) depths only. In addition, a number of auger drill hole gold anomalies in the Bélé area remain untested by air-core (AC) or reverse circulation (RC) drilling.

At the Bélé prospect, a program of ground geophysics commenced consisting of detailed magnetics, very low frequency (VLF) and gradient “IP” (Induced Polarization). Several lines of Pole-Dipole IP will also be run in coming months. The ground geophysics is intended to improve our understanding of the mineralisation and structural controls at Bélé and help direct follow-up drill testing of the individual Bélé prospects as well as delineate additional targets for drill testing in the vicinity of Bélé. The geophysics is expected to be completed and follow up drill testing commenced within the next quarter.

Significant RC intercepts attained at Bélé included:

Bélé Central

MHLC047 6m at 4.4g/t gold from 54m plus 2m at 14.6g/t from 86m MHLC048 18m at 3.5g/t gold from 36m including 4m at 10.4g/t gold from 48m MHLC051 6m at 5.7g/t gold from 40m including 2m at 15.4g/t gold from 44m MHLC079 8m at 5.1g/t gold from 30m including 2m at 16.7g/t gold from 34m

Tengréla Licences

Geological mapping and sampling was undertaken over several areas of recent artisanal mining activity on the Papara prospect located 20km from the Sissingué deposit on the Sissingué exploitation permit. A program of scout drill testing to evaluate the mineralisation potential of the area is scheduled for the June 2014 quarter. No exploration work was conducted on the Tengréla South license during the Quarter.

Mbengué and Napié Licenses

There were no exploration activities on the Mbengué and Napié licenses during the Quarter.

Burkina Faso

During the December Quarter the Company entered into a farm-in agreement with West African Gold Limited (“WAG”), an Australian unlisted junior explorer, in respect of four exploration permits (Koutakou, Barga, Touya and Tangaye) in the North of Burkina Faso. Under the terms of the agreement Perseus must spend a minimum of US$250,000 during the first year on exploration. Perseus may earn a 50% interest in the permits by spending US$2M and up to an 80% interest (or 72% after allowing for the government’s right to equity in mining ventures) interest by spending an additional US$2M within 5 years.

During the Quarter, Perseus conducted soil sampling and geological mapping programs on WAG’s Koutakou and Tangaye licenses. The soil sampling and mapping focussed on the 13km long Koutakou soil anomaly and was intended to confirm, infill and extend the substantial gold in soil anomaly that had been previously defined by WAG. A total of 1,400 soil and 46 rock samples were obtained with assay results pending. Once the results are received and the Koutakou soil anomaly is confirmed, a first-pass program of drilling will be proposed to test the anomaly.

COMPANY OUTLOOK FOR THE QUARTER ENDING JUNE 30, 2014

Based on current work schedules for the Quarter ending June 30, 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 amended Half Year guidance;
Continue to fine tune plant metallurgical performance and maximise SAG mill throughput;
Continue training of operating and maintenance staff; and
Continue to implement business improvement initiatives across all departments of the EGM.

Sissingué Gold Project

Review of project cost structure and development options; and
Review project economics and financing alternatives.

Exploration

Continue exploration for Mineral Resources on 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	Mar 31	Dec 31	Sep 30	Jun 30	Mar 31	Dec 31	Sep 30	Jun 30
months ended	2014	2013	2013	2013*	2013	2012	2012	2012
Total revenue and other income	64.262	63.373	71.988	69.301	77.254	71.992	75.187	84.553
Net profit / (loss) after tax	(16.002)	(6.878)	2.854	10.277	(0.892)	15.109	17.388	19.053
Basicprofit /(loss) per share(cents)	(3.34)	(1.25)	0.41	2.53	(0.23)	2.96	3.20	3.01

1All amounts shown above are in millions of Australian dollars except as otherwise indicated *Balances have been restated. Refer to “Changes in accounting policies including initial adoption” for further details

The operating results for the March 2014 Quarter included revenue earned from the sale of precious metals (March 2014 Quarter: $63.398 million; March 2013 Quarter: $77.238 million) less the cost of the goods sold (March 2014 Quarter: $59.345 million; March 2013 Quarter: $66.364 million). The increase in total income, from $63.373 million in the December Quarter to $64.262 million in the Quarter, is a result of a gain on spot deferred contracts entered into during the Quarter (March 2014 Quarter: $0.773 million; March 2013 Quarter: nil), slightly offset by lower gold sales (March 2014 Quarter: 43,873 oz; December 2013 Quarter: 44,617 oz) and a decrease in average prices received (March 2014 Quarter: US$1,294/oz of gold sold; December 2013 Quarter: US$1,318/oz of gold sold).

During the Quarter a foreign exchange loss ($14.243 million) was incurred (March 2013 Quarter: loss of $1.192 million) arising from an appreciation of the AUD relative to the USD during the period (March 31, 2014: 0.9251, December 31, 2013: 0.8874, September 30, 2013: 0.9322; June 30, 2013: 0.9146).

In addition, the result includes interest income (March 2014 Quarter: $0.091 million; March 2013 Quarter: $0.016 million), depreciation and amortisation (March 2014 Quarter: $9.374 million; March 2013 Quarter: $6.790 million), administration and corporate overheads (March 2014 Quarter: $1.423 million; March 2013 Quarter: $2.240 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:	Mar 31	Dec 31	Sep 30	Jun 30	Mar 31	Dec 31	Sep 30	Jun 30
	2014	2013	2013	2013*	2013	2012	2012	2012
Cash and cash equivalents	42.510	16.016	23.091	35.480	38.409	39.674	108.758	105.497
Total Assets	594.445	603.192	572.552	590.380	520.820	519.653	561.896	528.971
Total Liabilities	108.485	117.113	105.558	108.536	117.685	128.696	220.325	169.103
Net Assets	485.960	486.059	466.994	481.844	403.135	390.957	341.571	359.868

1All amounts shown are in millions of dollars

*Balances have been restated. Refer to “Changes in accounting policies including initial adoption” for further details

Total Assets

Total assets have decreased during the Quarter by $8.747 million (December 2013 Quarter increase of $30.640 million). The Quarter decrease is due to a decrease in non-current assets of $30.548 million offset by an increase in current assets of $21.801 million. Details of movements in specific accounts follow.

Cash and cash equivalents

At March 31, 2014, the Company had available cash or cash equivalent resources of $42.510 million plus a further $10.201 million of restricted funds on deposit securing environmental obligations. This cash balance represents an increase relative to the position as at December 31, 2013 ($16.016 million plus restricted cash of $10.634 million). The increase in cash reserves of $26.494 million during the March 2014 Quarter is due to a placement of about 68.694 million ordinary shares, raising approximately $32.286 million during the Quarter and decreased gold on hand at the end of the Quarter which had been converted to cash. In addition, inflows due to the sale of gold and silver during the period, which were at slightly lower prices than the previous quarters were offset by payments associated with the capital raising, capital work in progress and operation of the EGM, purchase of other fixed assets and payments for exploration and administration activities.

The net increase in cash reserves of $26.494 million during the March 2014 Quarter is discussed in some detail in the ” “Discussion on Cash flows .

Receivables

At March 31, 2014 the Company’s current receivables were $8.403 million (December 31, 2013: $9.270 million) while non-current receivables amounted to $49.667 million (December 31, 2013: $55.050 million). The decrease in current receivables during Quarter relative to prior periods is a result of the timing of gold sales and the receipt of the debtor payments while the decrease in non-current receivables in this period is due to a decrease in a VAT receivable due from the Ghana Revenue Authority as small refunds have been received.

Inventory

At March 31, 2014 the Company held inventories of $41.549 million (December 31, 2013: $43.208 million). The net decrease in inventory during the Quarter ($1.659 million) relative to the position at December 31, 2013, is the result of a decrease in bullion on hand, a write down of low grade stockpiles and a reduction of the volume of ROM stockpiles, with an offsetting increase in gold in circuit inventory and materials and supplies on hand.

Property, plant and equipment

At March 31, 2014, the Company recognised on its balance sheet a total of $202.524 million for property, plant and equipment (“PP&E”) (December 31, 2013: $215.499 million).

The Company capitalised $4.290 million of expenditure on PP&E during the March 2014 Quarter before expensing depreciation of $3.567 million. In addition, $4.062 million was reclassified from PP&E to mine properties and disposals of PP&E amounted to $1.386 million. Due to the depreciation of the USD against AUD, an $8.250 million foreign exchange loss was recorded against PP&E during the 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 March 31, 2014 the Company recognised mine properties of $181.100 million on its balance sheet (December 31, 2013: $183.109 million). During the Quarter, $6.650 million of expenditure of Mine Properties (most of which relates to deferred waste accounting entry) has been capitalised and $5.576 million of amortisation has been expensed. In addition, $4.338 million was reclassified from PP&E and exploration expenditure to mine properties and the net depreciation of the USD against AUD during the period referred to above gave rise to $7.421 million foreign exchange loss being recorded against mine properties.

Exploration and evaluation expenditure

At March 31, 2014 the Company recognised mineral interest acquisition and exploration expenditure of $32.954 million on its balance sheet (December 31, 2013: $33.202 million).

The Company capitalised $1.084 million of exploration and evaluation expenditure incurred on its Ghanaian and Ivorian exploration tenements during the Quarter ($2.004 million in the December 2013 Quarter) before recording a foreign exchange loss of $1.158 million. In addition, $0.174 million was reclassified from exploration expenditure to mine properties.

Other assets

At March 31, 2014 the Company recognised other assets of $8.327 million on its balance sheet (December 31, 2013: $11.722 million), of which $6.053 million is classified as current and $2.274 million is classified as non-current. The decrease in other assets during the Quarter is due to a decrease in prepayments offset by the gain on the mark-to-market revaluation of the available for sale financial asset (investment in Manas) during the Quarter. The decrease in

prepayments during the Quarter reflects the normal commercial activity associated with the EGM, and the unwinding of capitalised borrowing costs classified as prepayments.

Further offsetting the decrease, there was an increase in financial assets during the Quarter as a result of the mark to market of spot deferred USD metal sales contracts. At March 31, 2014 the Company held spot deferred USD metal sales contracts for 13,000 ounces of gold with short-term settlements and recorded an asset of $0.822 million (December 31, 2013: 1,923 ounces of gold and recorded an asset of $0.063 million).

Derivative financial instruments

As at March 31, 2014 the Company held forward sales contracts for 116,000 ounces of gold and recorded an asset of $23.616 million (December 31, 2013: 124,000 ounces of gold with a recorded asset of $35.464 million) on its balance sheet. The movement in mark-to-market value has been recorded as equity. $3.364 million (December 31, 2013: current asset of $4.971 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 $20.252 million (December 31, 2013: non-current asset of $30.493 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 March 31, 2014, the Company had liabilities totalling $108.485 million compared to $117.133 million at December 31, 2013. The changes in total liabilities during the Quarter are attributable to decreases in current liabilities of $2.267 million and a decrease in non-current liabilities of $6.381 million. Details of movements in specific accounts follow below.

Payables

During, the Quarter amounts owed to creditors, relating mainly to the operation of the EGM, decreased to $59.357 million from a total outstanding at December 31, 2013 of $61.624 million. On a quarter-on-quarter basis, creditors at March 31, 2014 were $2.267 million lower than at the end of the December Quarter. The decrease relative to the December Quarter reflects timing changes in payment of outstanding invoices in the Quarter.

Provision

A provision of $7.460 million as at March 31, 2014 for future rehabilitation work relating mainly to both old and new mining activity at EGM, was $0.523 million lower than the amount provided for at December 31, 2013 of $7.983 million. The change during the Quarter reflects a depreciation 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	Mar 31	Dec 31	Sep 30	Jun 30	Mar 31	Dec 31	Sept 30	Jun 30
months ended	2014	2013	2013	2013	2013	2012	2012	2012
Operating activities	0.648	(1.463)	(0.332)	(2.048)	15.054	6.130	25.675	21.641
Investing activities	(3.795)	(7.526)	(10.285)	(7.861)	(15.576)	(13.658)	(19.745)	(23.446)
Financing activities	31.027	-	-	0.082	(0.128)	(60.729)	-	(10.664)
1All amounts shown are in	millions of dollars

After considering the effects of foreign exchange movements, the Company’s cash balance increased by $26.494 million during the Quarter while in the corresponding period in 2013 cash decreased by $1.266 million.

Operating activities during the Quarter resulted in total cash receipts of $63.411 million (December Quarter: $57.440 million) from the sale of precious metals produced at the EGM and $0.002 million (December Quarter: $0.004 million) from bank interest that were offset by administration expenses and production expenses at EGM of $62.749 million (December Quarter: $58.644 million) and borrowing costs of $0.016 million (December Quarter: $0.250 million), giving a net cash inflow for Operating Activities during the period of $0.648 million (December Quarter: outflow of $1.463 million). This net cash outflow was $14.406 million less than the corresponding amount in the March 2013 Quarter when net inflows associated with Operating Activities totalled $15.054 million. In the March 2013 Quarter, there were cash receipts of $69.636 million from the sale of precious metals produced at the EGM. Interest received in the March 2013 Quarter was $0.017 million, administration expenses and production expenses were $54.304 million and borrowing costs of $0.295 million.

Investing activities during the Quarter included development expenses at EGM and SGP of $2.106 million (December Quarter: $5.249 million), payments relating to exploration in Ghana and Côte d’Ivoire of $1.638 million (December

Quarter: $1.975 million), payments relating to investments in put options of nil (December Quarter: $0.179 million), investment in fixed assets of $0.002 million (December Quarter: $0.204 million), investment in unlisted entity (West African Gold Limited) of $0.050 million (December Quarter: nil), offset by proceeds on disposal of property plant and equipment of $0.001 million (December Quarter: $0.081 million) that generated a net cash outflow of $3.795 million (December Quarter: $7.526 million). In the corresponding Quarter in 2013, investing activities included development of EGM and SGP ($12.702 million), exploration associated with the EGM and SGP ($2.617 million) and investment in fixed assets ($0.257 million), resulting in a net cash outflow associated with investing activities of $15.576 million.

Financing activities in the Quarter gave rise to a net cash inflow of $31.027 million (December 2013 Quarter: nil) due to a placement of about $68.694 million shares, raising approximately $32.286 million (December Quarter: nil) offset by share issue expenses of $1.259 million (December Quarter: nil). Financing activities in the March 2013 Quarter gave rise to a net cash outflow of $0.128 million. No other financing activities occurred during this period.

LIQUIDITY AND CAPITAL RESOURCES

As at March 31, 2014, the Company’s cash and cash equivalents amounted to $42.510 million (December 31, 2013: $16.016).

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 and 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.

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 above, 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 Quarter. The Company received nil during the Quarter (nil in the prior seven Quarters) 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. 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 enter into a term sheet in respect of a power supply agreement for the Edikan Gold Mine on or before December 31, 2011 (as extended); (ii) the Company use its best endeavours to complete a reorganization of its subsidiaries by December 31, 2011 (as extended); (iii) the Company grants additional security in favour of the lenders by December 31, 2011 (as extended) in the event the reorganization has not been completed by then; (iv) there is parliamentary ratification of the Edikan mining leases and stability agreement by December 31, 2011 (as extended); (v) the Company execute a foreign exchange retention account agreement with the Republic of Ghana, the Bank of Ghana, the lenders and a financial institution in Ghana by December 31, 2011 (as extended). While the Company is currently in compliance with the terms of the Facility Agreement and believes it will be able to satisfy the foregoing conditions subsequent in the prescribed time, it may require one or more waivers or extensions from the lenders in the future. A breach by the Company of certain provisions of the Facility Agreement, unless waived, will constitute an event of default, entitling the lenders to accelerate the payment of amounts due there under. The project loan is effectively secured by all (or substantially all) of the Company’s interest in the Edikan Gold Mine. An obligation to repay the amount owing under the project loan before its stated maturity could have an adverse effect on the Company and its financial position. As at March 31, 2014 no amounts were drawn under the facility.

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 March 31, 2014 a total of 129,000 ounces of gold (December 31, 2013: 124,000 ounces of gold) had been hedged under gold forward sale contracts for settlement from June 2014 to December 2015 at an average sale price of US$1,463 per ounce. 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 approximately 35% of the Company’s total forecast gold production to December 31, 2015 and approximately 4% of the gold contained in the Company’s currently defined total 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 March 31, 2014. 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$M)	0.950	0.875	0.875	1.000
Rent of corporatepremises	0.390	0.827	-	-
Total (US$M)	1.340	1.702	0.875	1.000

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 March 31, 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 March 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. 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 March 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 Quarter. The Company’s objectives and policies for managing these risks have not changed during the March 2014 Quarter.

OFF BALANCE SHEET ARRANGEMENTS

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

Secretarial and corporate service fees paid or payable to Corporate Consultants Pty Ltd, a company in which the joint company secretary, Mr Susmit Shah, has a beneficial interest, totalled $8,927 during the Quarter compared to $107,230 in the corresponding Quarter ending March 31, 2013.

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 2013 Financial Report, management determines when an area of interest should be abandoned. When a decision is made that an area of interest is not commercially viable, all costs that have been capitalised in respect of that area of interest are written off. In determining this, assumptions, including the maintenance of title, ongoing expenditure and prospectivity are made.

(ii) Impairment of assets

In accordance with accounting policy note 1(g) in the June 2013 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:

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

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

(iii) Share-based payment transactions

The Company measures the cost of equity-settled transactions with employees and 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 $0.049 million for the Quarter ended March 31, 2014 ($(0.079) million for the Quarter ended December 31, 2013 as a result of performance rights being cancelled on resignation of employees; $0.051 million for the Quarter ended September 30, 2013; $0.227 million for the Quarter ended June 30, 2013; nil for the Quarter ended March 31 2013; $0.245 million for the Quarter ended December 31, 2012; nil for the Quarter ended September 31, 2012; $(0.429) million for the Quarter ended June 30, 2012 as a result of options lapsing due to vesting conditions not being met and $1.528 million for the twelve months ended June 30, 2012).

The share based payment expense for the Quarter was $0.049 million compared to nil for the March 2013 Quarter.

(iv) Restoration and rehabilitation provisions

As set out in accounting policy note 1(t) in the June 2013 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 2013 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 advanced 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 mineral reserves and mineral resources based on information compiled by appropriately qualified persons relating to the geological data on the size, depth and shape of the ore body and this requires complex geological judgements to interpret data. The estimation of recoverable reserves is based upon factors such as estimates of foreign exchange rates, commodity prices, future capital requirements, and production costs along with geological assumptions and judgements made in estimating the size and grade of the ore body. Changes in the reserve or resource estimates may impact upon the carrying value of exploration and evaluation assets, mine properties, property, plant and equipment, goodwill, provision for rehabilitation, recognition of deferred assets, and depreciation and amortisation charges.

CHANGES IN ACCOUNTING POLICIES INCLUDING INITIAL ADOPTION

In the period ended 31 March 2014, the group has reviewed all of the new and revised Standards and interpretations issued by the AASB that are relevant to its operations and effective for annual reporting periods beginning on or after 1 July 2013.

From 1 July 2013 the group applied AASB Interpretation 20 Stripping costs in the production phase of a surface mine . The change in accounting policy has been applied to the earliest period presented and therefore there has been a restatement of certain 31 March 2013 and 30 June 2013 closing balances as follows:

As of and for the period ended 31 March 2013: Decrease in depreciation and amortisation expenses of $3,068,000 Increase in changes in inventories of finished goods and work in progress of $241,000 Increase in direct costs of mining and processing of $899,000 Increase in income tax expense of $677,000 Increase in profit after tax of $1,261,000 The effect on earnings per share related to the restatement in March 2013 was an increase of $0.0025.

As of and for the year ended 30 June 2013: Increase in inventories of $381,000 Increase in mine properties of $391,000 Increase in deferred tax liability of $270,000 Increase in reserves of $50,000 Increase in retained earnings of $402,000 Increase in non-controlling interest of $50,000 The effect on earnings per share related to the restatement in 2013 was a reduction of $0.001.

Prior to the implementation of Interpretation 20 the group capitalised excess stripping costs incurred during production based on the strip ratio method. Stripping ratios are a function of the quantity of ore mined compared with the quantity of overburden, or waste required to be removed to mine the ore. For each individual pit and interim pit (“component”) the actual strip ratio was compared to the life of component strip ratio and costs were deferred to the extent that the current period ratio exceeded the life of component strip ratio. The deferred costs were then expensed to the income statement in the period where the current ratio fell below the life of component ratio.

Following the application of Interpretation 20, the group is now required to amortise the deferred waste asset over the expected useful life of the identified component of the ore body that has been made more accessible by the activity. The group amortises the deferred waste asset on a unit of production basis over the economically recoverable reserves of the component concerned. The unit of measure is bank cubic meters of ore mined. The group already identified each component of the ore body via the use of interim pits and as such the requirement of Interpretation 20 to separately identify components of each ore body had no effect on the group at the date of application of the interpretation.

From 1 July 2013 the group applied AASB 13 Fair Value Measurement. The group has reassessed its policies for measuring fair values, in particular, its valuation inputs such as non-performance risk for fair value measurements of assets and liabilities. AASB 13 also requires additional disclosures.

Application of AASB 13 has not materially impacted the fair value measurements of the group. Additional disclosures where required, are provided in the individual notes relating to the assets and liabilities whose fair values were determined.

OUTSTANDING SECURITIES DATA

At March 31, 2014 the Company had issued 526,656,401 shares (December 31, 2013: 457,962,088; September 30, 2013: 457,962,088; June 30, 2013: 457,962,088; March 31, 2013: 457,962,088; December 31, 2012: 457,962,088; September 30, 2012: 457,962,088; June 30, 2012: 457,962,088), 1,440,000 options (December 31, 2013: 1,540,000; September 30,2013: 1,990,000; June 30, 2013: 1,990,000; March 31, 2013: 2,770,000; December 31, 2012: 2,870,000; September 30, 2012: 3,730,000; June 30, 2012: 4,470,000) and 7,263,813 performance rights (December 31, 2013: 2,091,575; September 30, 2013: 2,687,408; June 30, 2013: 3,035,629; March 31, 2013: 3,251,611; December 31, 2012: 600,000; September 30, 2012: nil; June 30, 2012: nil).

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

Ordinary shares 526,656,401 Options over unissued shares 1,440,000 Performance rights over unissued shares 6,949,893

Since March 31, 2014 and up to the date of this MD&A, the Company has not issued any shares, options or performance rights. Additionally, the Company announced on May 2, 2014 the resolution for obtaining shareholder approval at the Company’s next General Meeting or June 4, 2014, to issue 725,000 performance rights to its Managing Director Jeff Quartermaine and 400,000 performance rights to Executive Director Colin Carson.

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, 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 March 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 March 2014 Quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. As at March 31, 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 and political instability in West Africa;
risks related to the periodic renewal of the Company’s various exploration and exploitation permits;
risks related to global economic conditions;
risks and uncertainties relating to the interpretation of drill results, the geology, grade and continuity of mineral deposits and conclusions of economic evaluations;
risks related to negative operating costs flow;
results of initial feasibility, pre-feasibility and feasibility studies, and the possibility that future exploration, development or mining results will not be consistent with the Company’s expectations;
risks relating to possible variations in reserves, grade, planned mining dilution and ore loss, or recovery rates and changes in project parameters as plans continue to be refined;
mining and operating risks, including risks related to accidents, equipment breakdowns, labour disputes (including work stoppages and strikes) or other unanticipated difficulties with or interruptions in exploration and development;
the potential for delays in exploration or development activities or the completion of feasibility studies;
risks related to the inherent uncertainty of production and cost estimates and the potential for unexpected costs and expenses;
risks related to interest rate and foreign exchange rate fluctuations;
the uncertainty of profitability based upon the cyclical nature of the industry in which the Company operates;
the risk of changes to fiscal terms or operating approval conditions;
risks related to environmental regulation and liability; and
other risks and uncertainties related to the Company’s prospects, properties and business strategy.

A detailed discussion of these and other factors that may affect the Company’s prospects, actual results, performance, achievements or financial position is contained in the Company’s Annual Information Form dated September 26, 2013.

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 and SGP Ore Reserves and 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.

Mr Thomson is a full time employee of the Company. Mr Thomson has sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken, 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 Thomson consents to the inclusion in this report of the matters based on his information in the form and context in which it appears. 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.

The information in this report that relates to exploration results at the Mahalé exploration licence in C ô te d’Ivoire was first reported by the Company in compliance with the JORC Code 2012 in its March 2014 Quarterly Activities Report dated 29 April 2014.The Company confirms that it is not aware of any new information or data that materially affects the information included in that market announcement.

AI assistant

PERSEUS MINING LIMITED — Management Reports 2014

46513_rns_2014-05-14_9da39e4d-c1cd-47eb-b708-2f0784187d6c.pdf

May 14, 2014

MANAGEMENT’S DISCUSSION & ANALYSIS For the three months ended March 31, 2014

COMPANY OVERVIEW

OVERVIEW OF THE MARCH 2014 QUARTER

Summary

EGM, Ghana

Overview

Mining

Processing

Site Operating Costs

Subsequent Event – Fire at EGM Processing Plant

EGM Production and Cost Guidance

Personnel Changes at EGM

Gold Sales and Price Hedging

VAT Receivable

EGM Mineral Resource Estimate

EGM Mineral Reserve Estimate

Sissingué Development Project, Côte d’Ivoire

Development

SGP Mineral Resource Estimate

SGP Mineral Reserve Estimate

Exploration

Ghana

Côte d’Ivoire

Mahalé License, Côte d’Ivoire

Bélé Central

Tengréla Licences

Mbengué and Napié Licenses

Burkina Faso

COMPANY OUTLOOK FOR THE QUARTER ENDING JUNE 30, 2014

Edikan Gold Mine

Sissingué Gold Project

Exploration

OVERALL FINANCIAL PERFORMANCE OF THE COMPANY

DISCUSSION OF OPERATING RESULTS

DISCUSSION OF FINANCIAL CONDITION

Total Assets

Cash and cash equivalents

Receivables

Inventory

Property, plant and equipment

Mine Properties

Exploration and evaluation expenditure

Other assets

Derivative financial instruments

Total Liabilities

Payables

Provision

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

(vi) Taxes

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

(viii) Deferred stripping expenditure

(ix) Inventory

(x) Reserves and resources

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

Competent Person and ASX Listing Rules Statement :

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PERSEUS MINING LIMITED Management Reports 2014