PERSEUS MINING LIMITED — Management Reports 2014

Feb 16, 2014

February 14, 2014

MANAGEMENT'S DISCUSSION & ANALYSIS For the three months ended December 31, 2013

This Management's Discussion and Analysis ("MD&A") of Perseus Mining Limited and its controlled entities ("Perseus" or the "Company") is dated February 14, 2014 and provides an analysis of the Company's performance and financial condition for the three months ended December 31, 2013 (the "December 2013 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 unaudited interim consolidated financial statements for the December 2013 Quarter. The financial statements (and the financial information contained in this MD&A) comply with Australian Accounting Standards as issued by the Australian Accounting Standards Board and International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board. These documents are available under the Company's profile on the Canadian System for Electronic Document Analysis and Retrieval (SEDAR) at sedar.com and on the Company's website, www.perseusmining.com.

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

COMPANY OVERVIEW

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

Perseus is an integrated gold company whose activities include exploration and evaluation, development and gold production. The Company conducts its activities on under-explored gold belts located in West Africa.

Its principal assets are:

• A 90% interest in the Edikan Gold Mine ("EGM") (previously referred to as the Ayanfuri gold deposit or the Central Ashanti Gold Project), a gold mine located in Ghana. In July 2009, the Company completed a definitive feasibility study (''DFS'') on developing a mine and associated treatment facility for the EGM and based on the positive outcome of that DFS, construction of a gold mine and associated processing facility commenced in June 2010. The first gold pour and the first revenue received from the EGM took place on August 21, 2011 and on September 28, 2011 respectively. Commercial Production was declared on January 1, 2012. The remaining 10% interest in the EGM is a free-carried interest in the mine-owning company held by the Government of Ghana.
• An 85% interest in the Sissingué gold deposit, a development stage gold project (the ''Sissingué Gold Project'' or "SGP"). The Sissingué gold deposit was discovered during an exploration programme (the "Tengréla Gold Project") focussed on the Tengréla exploration tenements located in the north of Côte d'Ivoire. In November 2010, the Company completed a DFS on developing an open cut mining operation together with a conventional carbon in leach ("CIL") gold processing plant and related infrastructure based on the Sissingué gold deposit. The Company's 85% interest in the SGP reflects (as if it had been granted) a 10% free carried interest in the mine-owning company which is required to be allocated to the Government of Côte d'Ivoire in consideration of the issue of an Exploitation Permit pursuant to the 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.

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. Associated with the debt facility, the Company has a commitment to deliver 124,000 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 DECEMBER 2013 QUARTER

Summary

Gold production during the December 2013 Quarter at Perseus's EGM was 48,360 ounces. Total site cash costs (including production, royalties, development and sustaining capital) were US$1,228/oz for the Quarter. Material improvements continued to be achieved during the Quarter in the availability and metallurgical performance of the process plant, as well as the unit costs of gold production. Key production statistics for the Quarter are as shown below in Table 1.

Table 1: Key Production Statistics

Parameter	Unit	DecemberQuarter2013	SeptemberQuarter2013	JuneQuarter2013
Total material mined	bcm	2,879,791	2,562,917	3,097,974
	tonnes	7,424,205	6,960,972	7,794,700
Waste to ore strip ratio	bcm:bcm	4.64	2.83	3.80
	tonnes:tonnes	4.43	2.89	3.53
Ore mined
Oxide	tonnes	5,614	42,178	227,787
Primary	tonnes	1,365,183	1,747,592	1,494,354
Ore grade mined
Oxide	g/t gold	0.6	1.0	0.8
Primary	g/t gold	1.0	1.0	1.2
Ore stockpiles
Quantity	tonnes	3,921,802	4,472,546	4,311,679
Grade	g/t gold	0.5	0.6	0.6
Mill throughput	tonnes	1,791,410	1,628,900	1,511,162
Milled head grade	g/t gold	1.00	1.05	1.21
Gold recovery	%	84.4	83.4	80.7
Gold produced	ounces	48,360	45,830	47,565

Total ore and waste movement of 2,879,791 bank cubic metres ("bcm") for the Quarter was nearly 12% more than the September 2013 Quarter (the "September Quarter") of 2,562,917 bcm. Relative to prior quarters, material improvements were recorded during the Quarter in the availability and metallurgical performance of the process plant. Mill head grade at 1.00 g/t was 5% lower than the September Quarter head grade, while recovery of 84.4% had improved 1% on the September Quarter recovery. The average mill throughput rate of 954 dry tonnes per hour ("dtph") was 9% higher than the September Quarter of 874 dtph.

Perseus remains committed to its decision to defer development of Sissingué pending a review of the operating parameters, an assessment of the mineral potential of the nearby Mahalé prospect and or more favourable market conditions. Drilling of 28,568m was completed in Côte d'Ivoire resulting in significant drill intercepts from multiple prospects at the Mahalé licence.

As at December 31, 2013 Perseus had an available cash balance of $16.0 million (excluding $10.6 million in escrow), plus 8,984 ounces of gold on hand or at the refinery valued on that date at $12.2 million.

Material progress has been made towards resolution of an outstanding VAT liability of GHS93.0 million (or U$39.4 million) owed to Perseus Mining (Ghana) Limited by the Ghanaian Government.

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.

Mining

A total of 2,879,791bcm of ore and waste was mined during the Quarter, nearly 12% more than in the September Quarter. The ore mined included 5,614t of oxide ore at 0.6g/t gold and 1,365,183t of transitional and primary ore at 1.0g/t gold. The quarter-on-quarter increase in total material movements reflected a 25% increase in waste movements (associated with stripping of the AG Stage 3 pit) combined with a 24% decrease in the quantity of ore mined relative to the prior period.

During the Quarter, the ROM ore stockpiles that include both high and low grade ore (but not mineralised waste), plus crushed ore, decreased by 550,744 tonnes to 3,921,802t grading 0.5 g/t gold, containing approximately 68,321 ounces of gold. The reduction in stockpile reflected the plan to process stockpiled ore to offset reduced ore production while mining focussed on stripping Stage 3 of the AG Pit. These ore stockpiles were made up of approximately 42% oxide ore and 58% transitional/primary ore. Approximately 5% of the stockpiled ore is classified as medium/high grade, containing greater than 0.6g/t gold, while 95% 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 1,791,410, up 10% on throughput in the September Quarter and up 19% relative to the June 2013 Quarter. Gold production of 48,360 ounces during the Quarter was 6% above September 2013 quarter production, notwithstanding the fact that the head grade of ore treated (1.00g/t gold) was approximately 5% lower than in the September 2013 quarter (1.05g/t). The 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.

The effect on production of the decreased head grade was offset by an improvement in the gold recovery rate (84.4% compared to 83.4%) and improvements in the availability and usage of the process plant, including the primary crusher, oxide circuit and SAG mill. These parameters are summarised below.

Description		June 2013	September 2013	December 2013
	Unit	Quarter	Quarter	Quarter
Primary Crusher
Tonnes Crushed	Wmt1	1,158,829	1,577,104	1,661,562
Runtime	%	46%	56%	58%
Run Time	hrs	1,001	1,229	1,285
Throughput rate	wmtph	1,158	1,284	1,293
Oxide Circuit
Tonnes Fed	wmt	202,473	188,717	246,836
Run Time	%	59%	68%	67%
Run Time	hrs	1,288	1,496	1,487
Throughput rate	wmtph	157	125	166
SAG Mill
Tonnes Milled	Dmt2	1,511,162	1,628,900	1,791,410
Run Time	%	75%	84%	85%
Run Time	hrs	1,739	1,863	1,877
Throughput rate	dmtph	869	874	954

Table 2: Plant Performance Statistics - EGM

Notes: 1. Denotes wet metric tonnes.

1. Denotes dry metric tonnes.

Site Operating Costs

Total all-in site cash costs (including production, royalties, investment in pre-stripping and inventory, development and sustaining capital) for the Quarter were US$1,228/oz which was 8.5% lower than in the September Quarter. This improvement in costs was the result of an 11% decrease in unit mining costs and a 7% decrease in unit processing costs.

		Table 3: Key Quarterly Financial Statistics - EGM
--	--	---------------------------------------------------	--	--	--

Parameter	Units	December	September	June	March	December
		Quarter	Quarter	Quarter	Quarter	Quarter
		2013	2013	2013	2013	2012
Gold produced	ounces	48,360	45,830	47,565	57,179	51,090
Total gold sales1	ounces	44,617	49,069	52,626	53,618	48,080
Average sales price	US$/oz of goldsold	1,318	1,342	1,308	1,494	1,581
Mining cost	US$/t materialmined	3.71	4.16	3.42	3.57	3.11
Processing cost	US$/t ore milled	10.77	11.61	14.42	13.25	9.56
G & A cost	US$M / month	1.62	1.63	2.02	2.06	1.39
Royalties	US$/oz	75	92	93	88	107
Gold Production Cost:
Cash Cost	US$/oz	1,038	1,252	1,181	8632	617
Royalties	US$/oz	75	92	93	88	107
Total production cost	US$/oz	1,113	1,344	1,274	951	724
Capital Costs:
Inventory and Stripping	US$/oz	30	(101)	(36)	60	239
Other Capital	US$/oz	85	99	167	121	97
Total capital cost	US$/oz	115	(2)	131	181	336
Total Site Cost	US$/oz	1,228	1,342	1,405	1,132	1,060

Notes:

1. 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.

2. Includes $122/oz attributable to ROM stockpile value adjustment. If this is excluded on the basis of its "once off" nature, the cash cost would reduce to US$741/oz.

Of the US$85/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 previous quarter.

Gold Sales and Price Hedging

Of the 44,617 ounces of gold sold during the Quarter (September Quarter: 49,069 ounces) at a weighted average delivered price of US$1,318/oz, a total of 23,000 ounces were delivered into forward sales contracts at an average price of US$1,263/oz, with the remaining gold sales occurring at prevailing spot prices.

As at December 31, 2013, Perseus had a total outstanding hedge commitment of 124,000 ounces of gold deliverable in quarterly instalments 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. Perseus also held options to sell a further 9,000 ounces of gold at a price of US$1,150/oz at any time up to 10 January 2014, and 9,000 ounces of gold at a price of US$1,100/oz at any time up to 31 January 2014.

The total hedge position was "in the money" to the extent of US$31.6M as at December 31, 2013. In the March 2014 Quarter, 8,000 ounces of gold is scheduled for delivery at an average price of US$1,269/oz under the hedge programme.

VAT Receivable

Having received cash refunds totalling GHC6.2M to date, during the Quarter, the Company sought to negotiate a factoring deal with a number of financial intermediaries in relation to the outstanding GHC93M (US$39.4M) VAT receivable owed to the Company by the Ghanaian Government. These negotiations were unsuccessful in reaching agreement on terms that were acceptable to Perseus. However, as an alternative, the Company mandated a Ghanaian legal firm that specialises in revenue law to intervene directly with the Government on the Company's behalf.

This intervention by Perseus's legal team has resulted in:

The Ghana Revenue Authority has advised in writing their decision to issue GHC60M of Treasury Credit Notes to cover that part of the obligation that has been formally audited and approved.

• Discussions with the Government to include a cash component in the final settlement mix have reached an advanced stage.
• Continuing negotiations aimed at ensuring that through administrative measures available to the Government, the VAT receivable does not increase in the future.

Working Capital Debt Facility

During the Quarter, discussions were conducted with the Company's bankers on the provision of a US$25M stand by debt facility to be used as required to fund working capital. A term sheet was negotiated, Credit Committee approval for the term sheet was received and preparation of detailed loan documentation was commenced.

On close examination of the detailed terms of the debt facility, the Company formed the view that on balance, while the facility was available, it was preferable to remain unencumbered in an environment of uncertain gold prices, and therefore decided not to proceed with implementation of the debt facility at this time.

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 4 and 5. The Company's Proven and Probable Mineral Reserves at EGM are as shown in Table 6.

Table 4: M&I Mineral Resources – EGM1

	Measured Resources2			Indicated Resources2			Measured + IndicatedResources
Deposit	Quantity	Grade	Gold	Quantity	Grade	Gold	Quantity	Grade	Gold
	Mt	g/tgold	Ounces	Mt	g/tgold	Ounces	Mt	g/tgold	Ounces
Abnabna/AFGap/Fobinso3	42.9	1.1	1,529,000	27.7	0.9	789,000	70.6	1.0	2,318,000
Esuajah South	9.5	1.8	546,000	7.3	1.6	370,000	16.8	1.7	916,000
Esuajah North	16.9	0.9	494,000	18.4	0.8	493,000	35.3	0.9	987,000
Fetish	12.9	0.9	388,000	18.5	1.1	677,000	31.4	1.1	1,065,000
Chirawewa	-	-	-	5.8	1.1	197,000	5.8	1.1	197,000
Bokitsi	-	-	-	2.6	2.6	213,000	2.6	2.6	213,000
Mampong	-	-	-	-	-	-	-	-	-
Dadieso	-	-	-	-	-	-	-	-	-
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 30 April 2013.

Table 5: Inferred Mineral Resources – EGM1

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

1. Based on June 2013 Resource estimation.

2. 0.4g/t gold cut-off applied.

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

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

Table 6: Mineral Reserves – EGM1

1. Based on June 2013 Resource estimation.

2. Oxide – 0.6g/t cut-off; Transitional – 0.5g/t cut-off; Fresh – 0.4g/t cut-off, regular block.

3. Inferred mineral resources considered waste.

4. Last updated in June 2013 and allows for material mined to 30 June 2013.

EGM Production and Cost Guidance

Gold production and site cost guidance for the six months and twelve months ending Jun 30, 2014 remains unchanged from that previously provided to the market. Details are as follows:

Table 7: FY2014 Production and Cost Guidance

Parameter	Units	Six Months to30 June 2014	Twelve Months to30 June 2014
Production	Ounces	99,000 - 109,000	190,000-210,000
All-In Site Cash Costs	US$/oz	1,050 – 1,250	1,050 – 1,250

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 has deferred commencement of development of Sissingué pending a reassessment of the mine plan in the light of lower gold prices and clarification of a number of issues, including:

• 1. Finalisation of the new mining code in Côte d'Ivoire;
• 1. The granting of a request to extend the date for first production specified in the Sissingué Exploitation Permit beyond August 2014;
• 1. Exploration of nearby exploration licence areas such as Mahalé with the view to delineating new gold deposits that could be processed at the proposed Sissingué gold facility; and
• 1. A complete a review of the capital and operating cost estimates for Sissingué applying current cost and revenue expectations to revise mine planning scenarios.

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 8 and 9. The Company's Proven and Probable Mineral Reserves at SGP are as shown in Table 10.

			Table 8: M&I Mineral Resources - SGP
--	--	--	--------------------------------------	--	--

Weathering		Measured Resources			Indicated Resources		Measured + Indicated Resources
Domain	Quantity	Grade g/t	Gold	QuantityGrade		Gold	Quantity	Grade	Gold
	Mt	gold	Ounces	Mt	g/tgold	Ounces	Mt	g/t 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 9: Inferred Mineral Resources - SGP

Weathering	Inferred Resources
Domain	QuantityMt	Gradeg/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 be completed later this financial year leading to a restatement of Mineral Reserves for the SGP. The current Mineral Reserves for the SGP are as follows:

Table 10: Ore Reserves - SGP

	Proved Reserves			Probable Reserves			Proved & Probable Reserves
Ore type	QuantityMt	Gradeg/tgold	Gold'000Ounces	QuantityMt	Gradeg/tgold	Gold'000Ounces	QuantityMt	Gradeg/tgold	Gold'000Ounces
Oxide/Transition	-	-	-	3.4	2.1	224	3.4	2.1	224
Primary	-	-	-	6.3	2.1	433	6.3	2.1	433
Total	-	-	-	9.7	2.1	657	9.7	2.1	657

1. Reserve estimated by Coffey Mining using a pit design based on a US$950/oz gold price optimisation.

2. All Measured and Indicated Mineral Resources in pit designs designated as Probable Ore Reserves, Inferred Mineral Resources considered as waste.

3. A mining dilution of 5% was applied at a grade of 0.0g/t. In addition, a mining ore loss of 3% was assumed.

4. The Probable Ore Reserve as estimated in the DFS was estimated at a 0.55g/t gold cut-off.

Exploration

Ghana

There was no drilling conducted in Ghana during the Quarter (no drilling in September Quarter). Exploration activities were limited to geological mapping and prospecting plus data interpretation for planning of future Resource / Reserve drilling programs at the EGM.

Côte d'Ivoire

The Company completed 28,568 metres of drilling in Côte d'Ivoire during the December 2013 Quarter (16,435 metres September Quarter). No exploration work was conducted on the Tengréla licences during the Quarter.

Mahalé License, Côte d'Ivoire

A total of 28,568m (5,265m September Quarter) was drilled at the Bélé anomaly on the Mahalé licence during the Quarter consisting of 12,871m (132 holes) of reverse circulation ("RC") drilling, 11,875m (441 holes) of scout Air Core ("AC") drilling plus 3,872m of shallow rotary air blast ("RAB") drilling to test for near-surface geochemical anomalies, representing 670 sample points. The Mahalé licence is located 30-40km west-southwest of the Sissingué Gold Project.

Perseus's RAB rig was utilized to drill auger-style vertical holes into saprolite to 5.5m depths on average, on a nominal grid spacing of 100m X 100m across the Bélé soil anomaly to identify targets for follow-up drilling with AC and RC drilling rigs. Fences of wide-spaced AC drill holes were drilled in select areas of the Bélé prospect as a first pass drill test of gold in soil and/or auger anomalism.

First pass RC drilling was conducted to test AC drilling and auger anomalism at depth at the Bélé East, West and Central prospects. Although essentially an exploratory RC drilling campaign, RC drill hole spacing was fairly tight locally, down to 40m X 40m spacing, in order to better understand the nature, geometries and continuity to the mineralisation. A number of significant RC drill intercepts were returned from the Bélé East, West, and Central prospects, which is encouraging and suggests that a fairly extensive mineralising system is present at Bélé along the margins of a granitic intrusive that is estimated to be 3 kilometres in width, east-to-west, and at least 2 kilometres in a north-south direction. A number of significant RC intercepts are open-ended to depth and to varying degrees along strike. However, further drilling will be required in order to delineate a potentially economically viable resource, if one is present.

Further work at Bélé will commence in early 2014 with a program of ground geophysics, gradient IP and magnetics, before commencing further drilling. Given that the gold anomalism appears to be associated with the presence of pyrite, IP chargeability should be an effective tool to search for the extensions of gold mineralized zones and possibly locate additional targets for drill testing. Most of the area within the Bélé anomaly will be targeted for ground geophysics.

Highlights of the significant RC and AC drill intercepts returned during the Quarter are listed below. As of December 31, 2013 assays were still pending for 43 RC, 82 AC and 180 auger drill holes.

Significant RC intercepts attained at Bélé included:

Bélé East

Bélé Central
MHLC025	-	12m at 4.3g/t gold from 8m including 2m @ 20.0g/t from 10m
MHLC022	-	6m at 5.1g/t gold from 60m
MHLC011	-	24m at 1.6g/t gold from 70m
MHLC007	-	16m at 2.1g/t gold from 24m
Bélé West
MHRC035	-	30m at 1.2g/t gold from 10m including 12m at 2.3g/t from 12m plus 30m at 0.6g/t from60m
MHRC026	-	20m at 1.8g/t gold from 50m including 2m at 7.7g/t gold from 54m
MHRC024	-	14m at 6.2g/t gold from 82m including 4m at 10.7g/t gold from 88m
MHRC019	-	54m at 2.1g/t gold from 24m including 4m at 11.8g/t gold from 50m and 2m at 30.2g/tgold from 58m

MHRC046 - 2m at 6.9g/t gold from 30m plus 10m at 14.7g/t from 74m including 2m at 61.4g/t gold from 78m

Mbengué and Napié Licenses

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

Processing, imaging and interpretation products from the airborne magnetics and radiometrics surveys flown over Mbengué and Napié were received late in the Quarter and are under review to prioritise further exploration drilling on both projects.

Burkina Faso

During the December 2013 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 by spending an additional US$2M within 5 years.

COMPANY OUTLOOK FOR THE QUARTER ENDING MARCH 31, 2014

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

Edikan Gold Mine

• Produce gold at a total all-in site cash cost that is in line with Half Year guidance;
• Continue to fine tune plant metallurgical performance and maximise SAG mill throughput;
• Continue training of operating and maintenance staff; and
• Continue to implement business improvement initiatives across all departments of the EGM and realise projected cost savings.

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, Mbengué and Napié exploration licences.

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 Results1for the threemonths ended	Dec 312013	Sep 302013	Jun 302013*	Mar 312013	Dec 312012	Sep 302012	Jun 302012	Mar 312012
Total revenue and other income	63.373	71.988	69.301	77.254	71.992	75.187	84.553	60.960
Net profit / (loss) after taxBasic profit / (loss) per share (cents)	(6.878)(1.25)	2.8540.41	10.2772.53	(0.892)(0.23)	15.1092.96	17.3883.20	19.0533.01	19.7224.41

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 December 2013 Quarter included revenue earned from the sale of precious metals (December 2013 Quarter: $63.301 million; December 2012 Quarter: $71.961 million) less the cost of the goods sold (December 2013 Quarter: $67.603 million; December 2012 Quarter: $63.445 million). The decrease in total income, from $71.988 million in the September 2013 Quarter to $63.373 million in the December 2013 Quarter, is a result of a decrease in average sales prices (December 2013 Quarter: US$1,318/oz of gold sold; September 2013 Quarter: US$1,342/oz of gold sold) and lower gold sales (December 2013 Quarter: 44,617 oz; September 2013 Quarter: 49,069 oz).

In addition, the result includes interest income (December 2013 Quarter: $0.012 million; December 2012 Quarter: $0.031 million), depreciation and amortisation (December 2013 Quarter: $10.376 million; December 2012 Quarter: $4.860 million), administration and corporate overheads (December 2013 Quarter: $2.680 million; December 2012 Quarter: $2.412 million). In the December 2013 Quarter a foreign exchange gain ($4.938 million) was incurred (December 2012 Quarter: loss of $2.229 million) that arose from a devaluation of the AUD relative to the USD during the period (December 31, 2013: 0.8874, September 30, 2013: 0.9322; June 30, 2013: 0.9146).

DISCUSSION OF FINANCIAL CONDITION

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

Financial Position1as at:	Dec 31	Sep 30	Jun 30	Mar 31	Dec 31	Sep 30	Jun 30	Mar 31
	2013	2013	2013*	2013	2012	2012	2012	2012
Cash and cash equivalents	16.016	23.091	35.480	38.409	39.674	108.758	105.497	117.120
Total Assets	603.192	572.552	590.380	520.820	519.653	561.896	528.971	531.544
Total Liabilities	117.113	105.558	108.536	117.685	128.696	220.325	169.103	201.204
Net Assets	486.059	466.994	481.844	403.135	390.957	341.571	359.868	330.340

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 increased in the December 2013 Quarter by $30.640 million (September Quarter decrease of $17.828 million). The December Quarter increase is due to an increase in non-current assets of $38.603 million offset by a decrease in current assets of $7.963 million. Details of movements in specific accounts follow.

Cash and cash equivalents

At December 31, 2013, the Company had available cash or cash equivalent resources of $16.016 million plus a further $10.634 million of restricted funds on deposit securing environmental obligations. This cash balance represents a decrease relative to the position as at September 30, 2013 ($23.091 million plus restricted cash of $10.123 million). The decrease in cash reserves of $7.075 million during the December 2013 Quarter is due to increased gold on hand at the end of the Quarter which had not been converted to cash. In addition, payments associated with capital work in progress and operation of the EGM, purchase of other fixed assets and payments for exploration and administration activities; offset by the sale of gold and silver during the period, which were at lower prices than the previous quarters due to weakening gold and silver markets.

The net decrease in cash reserves of $7.075 million during the December 2013 Quarter is discussed in some detail in the "Discussion on Cash flows*"*.

Receivables

At December 31, 2013 the Company's current receivables were $9.270 million (September 30, 2013: $5.543 million) while non-current receivables amounted to $55.050 million (September 30, 2013: $56.268 million). The increase in current receivables during the December 2013 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 refund due from the Ghana Revenue Authority as small refunds of the receivable have been received.

Inventory

At December 31, 2013 the Company held inventories of $43.208 million (September 30, 2013: $49.698 million). The net decrease in inventory during the December 2013 Quarter ($6.490 million) relative to the position at September 30, 2013, is the result of a write down of low grade stockpiles and a reduction of the volume of ROM stockpiles, with an offsetting increase in bullion on hand and an increase in materials and supplies on hand.

Property, plant and equipment

At December 31, 2013, the Company recognised on its balance sheet a total of $215.499 million for property, plant and equipment ("PP&E") (September 30, 2013: $204.447 million).

The Company capitalised $4.761 million of expenditure on PP&E during the December 2013 Quarter before expensing depreciation of $3.255 million. In addition, $0.051 million was reclassified from mine properties to PP&E and disposals of PP&E amounted to $1.219 million. Due to the appreciation of the USD against AUD, a $10.714 million foreign exchange gain was recorded against PP&E during the December 2013 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 December 31, 2013 the Company recognised mine properties of $183.109 million on its balance sheet (September 30, 2013: $149.485 million). During the December 2013 Quarter various restatements have been made due to the adoption of AASB Interpretation 20, as a result $0.293 million of expenditure on mine properties (relating to a deferred waste accounting entry) has been capitalised and $nil of amortisation has been expensed. An adjustment was also made to the opening balances of the December 2013 Quarter of $6.246 million.

In addition, $18.936 million was reclassified from exploration expenditure to mine properties and the net appreciation of the USD against AUD during the period referred to above gave rise to $8.149 million foreign exchange gain being recorded against mine properties.

Exploration and evaluation expenditure

At December 31, 2013 the Company recognised mineral interest acquisition and exploration expenditure of $33.202 million on its balance sheet (September 30, 2013: $48.362 million). The year-on-year movement in capitalised exploration and evaluation expenditure reflects the extensive exploration programmes conducted by the Company in recent years.

The Company capitalised $2.004 million of exploration and evaluation expenditure incurred on its Ghanaian and Ivorian exploration tenements during the December 2013 Quarter ($1.754 million in the September Quarter) before recording a foreign exchange gain of $1.822 million in the December 2013 Quarter. In addition, $18.986 million was reclassified from exploration expenditure to mine properties.

Other assets

At December 31, 2013 the Company recognised other assets of $11.722 million on its balance sheet (September 30, 2013: $16.210 million), of which $9.756 million is classified as current and $1.966 million is classified as non-current. The decrease in other assets during the December 2013 Quarter is due to a decrease in prepayments and the loss on the mark-to-market revaluation of the available for sale financial assets (investment in Manas). The decrease in prepayments during the December 2013 Quarter reflects the normal commercial activity associated with the EGM, and the unwinding of capitalised borrowing costs classified as prepayments.

Derivative financial instruments

As at December 31, 2013 the Company held forward sales contracts for 124,000 ounces of gold and recorded an asset of $35.464 million (September 30 2013: 147,000 ounces of gold with a recorded asset of $15.409 million) on its balance sheet. The movement in mark-to-market value has been recorded as equity while $4.971 million (September 30, 2013: current liability of $3.387 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 $30.493 million (September 30, 2013: non-current asset of $18.796 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 December 31, 2013, the Company had liabilities totalling $117.133 million compared to $105.558 million at September 30, 2013. The changes in total liabilities during the December 2013 Quarter are attributable to increases in current liabilities of $2.139 million and an increase in non-current liabilities of $9.436 million. Details of movements in specific accounts follow below.

Payables

During, the December 2013 Quarter amounts owed to creditors, relating mainly to the operation of the EGM, increased to $61.624 million from a total outstanding at September 30, 2013 of $50.519 million.

On a quarter-on-quarter basis, creditors at December 31, 2013 were $11.105 million higher than at the end of the September Quarter. The increase relative to the September Quarter reflected catching up of the prior Quarter administrative delay in the timing of payments of outstanding invoices in the December 2013 Quarter.

Provision

A provision of $7.983 million as at December 31, 2013 for future rehabilitation work relating mainly to both old and new mining activity at EGM, was $0.215 million higher than the amount provided for at September 30, 2013 of $7.768 million. The change during the December 2013 Quarter reflects a slight increase in the area requiring rehabilitation as a result of increased mining activity and an appreciation of the USD against the AUD during the period, as highlighted above.

DISCUSSION ON CASHFLOWS

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

Cash flows1for threemonths ended	Dec 312013	Sep 302013	Jun 302013	Mar 312013	Dec 312012	Sept 302012	Jun 302012	Mar 312012
Operating activities	(1.463)	(0.332)	(2.048)	16.924	6.130	25.675	21.641	25.163
Investing activities	(7.526)	(10.285)	(7.861)	(17.448)	(13.658)	(19.745)	(23.446)	(26.206)
Financing activities	-	-	0.082	0.047	(60.729)	-	(10.664)	(8.240)

1All amounts shown are in millions of dollars

After considering the effects of foreign exchange movements, the Company's cash balance decreased by $7.075 million during the December 2013 Quarter while in the corresponding period in 2012 cash decreased by $69.083 million.

Operating activities during the December 2013 Quarter resulted in total cash receipts of $57.440 million (September Quarter: $73.522 million) from the sale of precious metals produced at the EGM and $0.004 million (September Quarter: $0.022 million) from bank interest that were offset by administration expenses and production expenses at EGM of $58.644 million (September Quarter: $73.871 million) and borrowing costs of $0.250 million (September Quarter: $0.005 million), giving a net cash outflow for Operating Activities during the period of $1.463 million (September Quarter: outflow of $0.332 million). This net cash outflow was $7.593 million less than the corresponding amount in the December 2012 Quarter when net inflows associated with Operating Activities totalled $6.130 million. In the December 2012 Quarter, there were cash receipts of $72.090 million from the sale of precious metals produced at the EGM. Interest received in the December 2012 Quarter was $0.061 million, administration expenses and production expenses were $64.522 million and borrowing costs of $1.500 million.

Investing activities during the December 2013 Quarter included development expenses at EGM and SGP of $5.249 million (September Quarter: $6.956 million), payments relating to exploration in Ghana and Côte d'Ivoire of $1.975 million (September Quarter: $3.189 million), payments relating to investments in put options of $0.179 million (September Quarter: nil), investment in fixed assets of $0.204 million (September Quarter: $0.140 million) offset by proceeds on disposal of property plant and equipment of $0.081 million (September Quarter: nil) that generated a net cash outflow of $7.526 million (September Quarter: $10.285 million). In the corresponding Quarter in 2012, investing activities included development of EGM and SGP ($8.881 million), exploration associated with the EGM and SGP ($4.043 million), investment in fixed assets ($0.331 million) and a payment for a bank guarantee ($0.403 million), resulting in a net cash outflow associated with investing activities of $13.658 million.

Financing activities in the December 2013 Quarter gave rise to a net cash outflow of nil (September 2013 Quarter: nil). In the December 2012 Quarter, the third scheduled debt repayment of US$9.0 million to lenders of the project debt facility occurred along with the repayment of the remaining balance outstanding of US$54.0 million, giving rise to a payment of $60.729 million. No other financing activities occurred during this period.

LIQUIDITY AND CAPITAL RESOURCES

As at December 31, 2013, the Company's cash and cash equivalents amounted to $16.016 million (September 30, 2013: $23.091).

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.

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. The Company received nil during the December 2013 Quarter (nil in the September 2013 Quarter; nil in the June 2013 Quarter; nil in the March 2013 Quarter; nil in the December 2012 Quarter; nil in the September 2012 Quarter; nil in the June 2012 Quarter; $2.401 million in the March 2012 Quarter) 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 December 31, 2013 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 December 31, 2013 a total of 124,000 ounces of gold (September 30, 2013: 147,000 ounces of gold) had been hedged under gold forward sale contracts for settlement from March 2014 to December 2015 at an average sale price of US$1,463 per ounce. The inception of this hedging was initially a pre-requisite for Perseus to be able to draw the full US$85 million debt facility in the June 2011 Quarter. A further total of 70,000 ounces of gold was sold forward in the September 2012 Quarter, following the successful restructure, extension and up-sizing of the debt facility. A total of 176,000 ounces of gold has been delivered under forward sales contracts up to and including December 31, 2013, leaving the outstanding balance of gold hedging at 124,000 ounces of gold. This hedging represents approximately 30% 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. In addition, options granting Perseus the right but not the obligation to sell 9,000 ounces of gold at US$1,150 per ounce at any time up to January 10, 2014, and 9,000 ounces of gold at US$1,150 per ounce at any time up to January 31, 2014 as part of the Company's financial risk management strategy.

As at the date of this MD&A the Company had no material commitments for future capital expenditure over and above those that arise in the normal course of business.

COMMITMENTS

The following table sets forth information regarding the Company's contractual obligations as at December 31, 2013. The Company has no long term debt, finance lease obligations, operating leases or purchase obligations except as indicated below.

	Less than 1Year	1 - 3 Years	4 - 5 Years	After 5 years
Exploration expenditure1 (US$M)	0.950	0.875	0.875	1.000
Rent of corporate premises	0.386	0.924	-	-
Total (US$M)	1.336	1.799	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 December 31, 2013 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 December 2013 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 December 2013 Quarter.

In November 2012 the Company fully repaid its project finance facility. Consequently, it presently has no borrowings at variable rates. During the September 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 December 2013 Quarter.

OFF BALANCE SHEET ARRANGEMENTS

There are no off-balance sheet arrangements as at December 31, 2013.

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 company secretary, Mr Susmit Shah, has a beneficial interest, totalled $44,531 during the December 2013 Quarter compared to $107,031 in the corresponding Quarter ending December 31, 2012.

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 $(0.079) 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 $(0.079) million compared to nil for the December 2012 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 December 2013, 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 30 June 2013 closing balances as follows:

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 ration 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 the actual strip ratio was compared to the life of pit strip ratio and costs were deferred to the extent that the current period ratio exceeded the life of pit strip ratio. The deferred costs were then expensed to the income statement in the period where the current ratio fell below the life of pit 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 pit 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 affect on the group.

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 December 31, 2013 the Company had issued 457,962,088 shares (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), 1,540,000 options (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 2,091,575 performance rights (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	457,962,088
Options over unissued shares	1,540,000
Performance rights over unissued shares	2,091,575

Since December 31, 2013 and up to the date of this MD&A, the Company has not issued any shares or options. In January 2014, 5,250,000 performance rights with an effective issue date of January 1, 2014 were issued subsequent to December 31, 2013 under the terms of the Company's Performance Rights Plan, approved by shareholders in November 2012. Furthermore, the Company announced on January 29, 2014 the intention, subject to shareholder approval at the Company's next General Meeting, 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 December 31, 2013, 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 December 2013 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 December 2013 Quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. As at December 31, 2013, 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: 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.

The information in this report that relates to exploration results at the Mbengué exploration licence in Côte d'Ivoire is based on, and fairly represents, information and supporting documentation prepared 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 Côte d'Ivoire was first reported by the Company in compliance with JORC 2012 in its December 2013 Quarterly Activities Report dated 28 January 2014.The Company confirms that it is not aware of any new information or data that materially affects the information included in the market announcement referred to above.