PANAUST LIMITED - ASX: PNA

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Description

PanAust Limited is a leading copper and gold producer in Southeast Asia and has a portfolio of organic growth projects in both commodities. In March 2011, the Company acquired a majority interest in the Inca de Oro Copper-Gold Project in Chile from Corporación Nacional del Cobre de Chile (‘Codelco’), the world’s largest copper company; a move that provides geographic diversity and a base for establishing copper production in South America, the world’s most prolific copper producing region.

PanAust’s key producing asset is the Phu Kham Copper-Gold Operation, which is located within the Company’s highly prospective 2,636 square kilometre Contract Area in Laos.

PanAust’s committed growth includes construction of the Ban Houayxai Gold-Silver Project, 25 kilometres west of the Operation at Phu Kham. Commissioning of Ban Houayxai is scheduled to commence in late 2011. In addition, the Phu Kham Copper-Gold Upgrade will increase ore processing rates from mid-2012. The timing for implementing the upgrade will coincide with a scheduled decline in ore head grades as mining progresses into the primary copper phase of the open-pit.

Following a successful resource development drilling program in the northern part of the Lao Contract Area, PanAust has commenced scoping studies on the development concept for the Phonsavan Copper-Gold Project.

In Thailand, PanAust is earning a majority interest in the Puthep Copper Project by completing a feasibility study.

PanAust Limited shares are listed on the Australian Securities Exchange (ASX:PNA) and the Company is a constituent of the benchmark S&P/ASX 100 Index. The Company’s head office is located in Brisbane, Australia.

The Phu Kham Copper-Gold Project, Laos

The Phu Kham Copper-Gold Operation’s consistent high performance and strong cash-flow is the foundation of PanAust’s growth strategy. The Operation employs a conventional open-pit mining method comprising drill, blast, load and haul. The process plant, which has a design capacity of 12Mtpa of ore, comprises a SAG mill and ball mill grinding circuit, each rated at 13MW, with copper and precious metal recovery by flotation. The final product is a copper-gold concentrate, grading approximately 25 per cent copper, seven grams per tonne (g/t) gold and 60g/t silver. Concentrate is trucked 1,000 kilometres in covered containers to Sriracha Harbour, south of Bangkok in Thailand, for shipment to smelters largely throughout Southeast Asia.

Ban Houayxai Project, Laos

The US$150 million Ban Houayxai Gold-Silver Project is scheduled to commence initial commissioning in late 2011 with steady state production anticipated to be reached during the March quarter 2012. Once operational, Ban Houayxai will comprise an open-pit mine feeding ore to a conventional 4Mtpa Carbon in Leach (CIL) process plant. It is scheduled to produce over 100,000oz of gold in its first year of production with substantial silver credit. The Project is located approximately 25 kilometres west of the Phu Kham Copper-Gold Operation and will benefit from cost savings through the sharing of support services and spares inventory. The Ban Houayxai deposit remains open at depth and to the west. Further resource development drilling is planned with the target of extending the mine life to 10 years.

Puthep Copper Project, Thailand

The Puthep Copper Project is located near the major provincial centre of Loei in north-east Thailand and is within three hours by road from PanAust’s Vientiane office in Laos. The project is a joint venture between PanAust and Padaeng Industry Public Company Limited (listed on the Stock Exchange of Thailand). Puthep has a concession agreement with the Government of Thailand which covers two deposits – PUT 1 and PUT 2 – separated by 14 kilometres. PUT 1 is Thailand’s largest known copper deposit.

PanAust has a shareholding interest of 49 per cent. The Company will earn a 51 per cent interest by completing a feasibility study and has options to further increase its interest to a total of 60 to 70 per cent. Under the Thailand-Australia Free Trade Agreement, the Company can acquire a 60 per cent interest in Puthep, with Thai Government approval needed to acquire 70 per cent. The Government of Thailand has the right to acquire a 10 per cent interest.

The Puthep Company is targeting a project with an annual production rate of 25,000 to 30,000t of cathode copper over an eight-year mine life using whole of ore leaching to process the near-surface chalcocite mineralisation. During 2011, Puthep plans to complete further leach test work and will submit a mine plan to apply for mining leases and complete community consultation and an Environmental Social Impact Assessment.

Inca de Oro Copper-Gold Project, Chile

In March 2011, PanAust acquired a majority interest in the Inca de Oro Copper-Gold Project in Chile from Corporación Nacional del Cobre de Chile (Codelco). The acquisition fits well with PanAust's corporate strategy for growth and represents an excellent opportunity to establish a business in one of the world's most attractive copper mining regions. The deposit hosts an estimated Indicated and Inferred sulphide copper-gold Mineral Resource of 259 million tonnes grading 0.46 per cent copper and 0.13g/t gold.

The Inca de Oro (IDO) pre-feasibility study, which was completed by Codelco, confirmed the potential for a conventional open-pit mining and flotation operation to support annual production of approximately 50,000t of copper and 40,000oz of gold in concentrate at a competitive cash cost over a plus ten-year mine life. PanAust is moving to complete the feasibility study, with the objective of entering into orders for long-lead items in early 2012. Completion of a successful feasibility study in 2012 and an anticipated two-year construction program could see initial production at Inca de Oro commence in 2014.

The IDO deposit is a typical oxide-transitional-primary zoned Andean style porphyry copper-gold deposit and is located near the town of Inca de Oro ('gold of the Incas') which has a population of approximately 500 and is located in the province of Chanaral, Region III of Atacama, Chile.

PanAust's interest in IDO S.A. will be held through a 90 per cent interest in PanAust Minera, with the remaining 10 per cent being held by independent Australian private company, The Minera Group. PanAust Minera will hold a 66 per cent interest in IDO S.A. (giving PanAust a 59.4 per cent beneficial interest) and Codelco will retain a 34 per cent interest.

PanAust Minera will initially invest US$45.3 million of equity into IDO S.A. to acquire 66 per cent of the company and acquire study data and tenements from Codelco. A further US$10 million will be invested by PanAust Minera before 30 June 2011 to fund a feasibility study on the Inca de Oro Project. PanAust Minera has also agreed that IDO S.A. will pay a net smelter return royalty to Codelco from revenues generated by the Inca de Oro Project, capped at US$30 million in 2011 dollar terms.

Mine For

gold, copper, silver

Location of operation(s)

Laos, Thailand, Chile

Address

Level 2 , 99 Melbourne Street
South Brisbane, QLD, AUSTRALIA

Phone

(61 7) 3117 2000

Email

Website

http://www.panaust.com.au/

Last Updated

11/5/2011