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BRISBANE, Australia, April 27, 2007 (Starlink Media) – Strong copper prices mean a bright future for Pan Australian Resources’ Phu Kham copper-gold project in Laos, which according to the company’s managing director is only months away from commissioning.
Managing Director Gary Stafford has seen the listed Australian minerals explorer and producer grow to over A$700 million in market capitalisation, with a working gold mine at Phu Bia funding development of Phu Kham and other exploration both in Laos and nearby Thailand.
According to Mr Stafford, the company-making Phu Kham project is running both within budget and ahead of schedule – something few miners can boast of at a time of huge demand and frequent cost over-runs.
“The schedule which we announced at the time of the feasibility study, in April 2006, said that we would be commissioning and producing first concentrate in mid-2008,” he said.
“In actual fact, we’ll start pre-commissioning in December of this year, so we’re well ahead of the schedule for first concentrate production.”
Pan Australian has a budget of US$241 million for Phu Kham, including $9 million for contingencies.
At full production, the Phu Kham copper-gold concentrator is expected to produce more than 200,000 dry metric tonnes of concentrate per year containing an average of 50,000 tonnes of copper, 50,000 ounces of gold and 400,000 ounces of silver.
Rising fuel prices have hit the industry hard, but Mr Stafford said higher gold prices would offset any increase in operating costs.
“Even if you take into account the higher oil prices that exist today and if you take into account the higher gold prices that exist today, the weight of the extra value we get from the gold means that our cash cost comes down to the mid-50s [US cents per pound] rather than the
mid-70s,” he said.
The managing director is bullish on copper prices despite some analysts forecasting a slowdown in the six-year-long resources boom.
“We think that the copper price going through to 2008 is probably going to be above US$3. We would be delighted if it was above $2.50 because at $2.25 copper and $550 per ounce gold, our cash flow will be over US$100 million a year,” he said.
“So at current prices of well over US$3 for copper and well over US$600 approaching $700 per ounce for gold, we feel that things can only be very positive for us come our first full production year.”
The wet season has complicated matters for the company, but Mr Stafford pointed to a turnaround in performance at Phu Bia during the March quarter 2007.
“In the March quarter we had a very good turnaround in performance of the gold mine. We produced over 10,000 ounces for the quarter, which is a record for us. It probably contributed about $2.5 million, so it was a very big contributor to the company,” he said.
“And also, we furthered the integration of our mining operations for the gold mine with the preparations for mining the copper-gold project.”
Having raised all the funding for the Phu Kham project, Mr Stafford is confident of the company’s financial position.
“From a funding perspective we are very well positioned. We’ve got over US$50 million in cash, and we’re working through the syndication process for the senior project finance,” he said.
“On that basis we don’t see any need to raise any new capital. If there’s an opportunity that arises whereby we need to raise more capital, well that’s a different matter.
“But in relation to funding the copper-gold project we’re building that project within budget and we’ve got sufficient funds to complete the construction of that project,” he said.
Pan Australian has enjoyed a large rise in its share price during 2007 as the market has responded to the prospect of Phu Kham nearing production. Further gains are likely, according to Mr Stafford.
“Our share price has moved upwards by about 40 per cent since the beginning of the year. Now really what we’re seeing there is the rapid closing of the gap between the value that analysts put on our company and the Phu Kham project, and the NPV [net present value] on a per share basis,” he said.
“I think that when we come into production, then hopefully we’ll see a premium attached to our share price.”
The outlook for Pan Australian remains bright due to Phu Kham and its other exploration projects, including Puthep – Thailand’s biggest known copper deposit, he said.
“The key things to look for going forward for the rest of this year are that we make good progress with developing the Phu Kham project - we keep on schedule and within budget,” he said.
“From an exploration perspective, we’ve got a number of rigs drilling both in Laos and also now in Thailand, where we have two rigs working on the Puthep copper project.
“We already have about an 80 million tonne Inferred and Indicated resource at Puthep, and we believe that by drilling deeper holes there’s an excellent potential to increase significantly the size of that resource and give us the basis for another Phu Kham-style operation.”
Copyright Starlink MediaTM
Managing Director Gary Stafford has seen the listed Australian minerals explorer and producer grow to over A$700 million in market capitalisation, with a working gold mine at Phu Bia funding development of Phu Kham and other exploration both in Laos and nearby Thailand.
According to Mr Stafford, the company-making Phu Kham project is running both within budget and ahead of schedule – something few miners can boast of at a time of huge demand and frequent cost over-runs.
“The schedule which we announced at the time of the feasibility study, in April 2006, said that we would be commissioning and producing first concentrate in mid-2008,” he said.
“In actual fact, we’ll start pre-commissioning in December of this year, so we’re well ahead of the schedule for first concentrate production.”
Pan Australian has a budget of US$241 million for Phu Kham, including $9 million for contingencies.
At full production, the Phu Kham copper-gold concentrator is expected to produce more than 200,000 dry metric tonnes of concentrate per year containing an average of 50,000 tonnes of copper, 50,000 ounces of gold and 400,000 ounces of silver.
Rising fuel prices have hit the industry hard, but Mr Stafford said higher gold prices would offset any increase in operating costs.
“Even if you take into account the higher oil prices that exist today and if you take into account the higher gold prices that exist today, the weight of the extra value we get from the gold means that our cash cost comes down to the mid-50s [US cents per pound] rather than the
mid-70s,” he said.
The managing director is bullish on copper prices despite some analysts forecasting a slowdown in the six-year-long resources boom.
“We think that the copper price going through to 2008 is probably going to be above US$3. We would be delighted if it was above $2.50 because at $2.25 copper and $550 per ounce gold, our cash flow will be over US$100 million a year,” he said.
“So at current prices of well over US$3 for copper and well over US$600 approaching $700 per ounce for gold, we feel that things can only be very positive for us come our first full production year.”
The wet season has complicated matters for the company, but Mr Stafford pointed to a turnaround in performance at Phu Bia during the March quarter 2007.
“In the March quarter we had a very good turnaround in performance of the gold mine. We produced over 10,000 ounces for the quarter, which is a record for us. It probably contributed about $2.5 million, so it was a very big contributor to the company,” he said.
“And also, we furthered the integration of our mining operations for the gold mine with the preparations for mining the copper-gold project.”
Having raised all the funding for the Phu Kham project, Mr Stafford is confident of the company’s financial position.
“From a funding perspective we are very well positioned. We’ve got over US$50 million in cash, and we’re working through the syndication process for the senior project finance,” he said.
“On that basis we don’t see any need to raise any new capital. If there’s an opportunity that arises whereby we need to raise more capital, well that’s a different matter.
“But in relation to funding the copper-gold project we’re building that project within budget and we’ve got sufficient funds to complete the construction of that project,” he said.
Pan Australian has enjoyed a large rise in its share price during 2007 as the market has responded to the prospect of Phu Kham nearing production. Further gains are likely, according to Mr Stafford.
“Our share price has moved upwards by about 40 per cent since the beginning of the year. Now really what we’re seeing there is the rapid closing of the gap between the value that analysts put on our company and the Phu Kham project, and the NPV [net present value] on a per share basis,” he said.
“I think that when we come into production, then hopefully we’ll see a premium attached to our share price.”
The outlook for Pan Australian remains bright due to Phu Kham and its other exploration projects, including Puthep – Thailand’s biggest known copper deposit, he said.
“The key things to look for going forward for the rest of this year are that we make good progress with developing the Phu Kham project - we keep on schedule and within budget,” he said.
“From an exploration perspective, we’ve got a number of rigs drilling both in Laos and also now in Thailand, where we have two rigs working on the Puthep copper project.
“We already have about an 80 million tonne Inferred and Indicated resource at Puthep, and we believe that by drilling deeper holes there’s an excellent potential to increase significantly the size of that resource and give us the basis for another Phu Kham-style operation.”
Copyright Starlink MediaTM
