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2008 has been an historic year for mining company PanAust, with the official opening in May of its US$241 million Phu Kham Copper-Gold Operation in Laos. Shareholders who came to the company’s 2008 Annual General Meeting also saw further historic changes in the company, with a name change honouring departing chairman, Bob Bryan.
Bob Bryan: Ladies and gentlemen, the past year has seen a doubling of share price and more at a time when the marketplace has not always been kind to aspiring miners, and we anticipate further share price re-rating as the cash flow from Phu Kham copper and gold production starts building up.
Two weeks ago, I had the fun of participating in the official opening of the Phu Kham Copper-Gold Mine – several months ahead of schedule, and within budget. This is a really impressive performance given the chronic shortage of manpower in the industry and ever extending delivery dates for equipment.
Shareholders will be particularly interested in the likely repayment schedule of the capital cost of Phu Kham in view of the strong copper and gold prices. It is likely that the term debt of US$185 million will be repaid by late 2009. That is a stunning achievement for a mine of this size.
Phu Kham is set to contribute a significant increase to exports from Laos, on top of the benefits to the local communities.
The development of Phu Kham will have a major impact on the Lao economy and it is already having a quite massive impact on the local communities.
In terms of the Lao economy, in 2009, which will be our first full year of production at Phu Kham, we anticipate contributing at least US$500 million to Lao exports on the assumption of a copper price of US$3.50 per pound and a gold price of US$800 per ounce.
Now compare that to the total exports from Laos this year of about US$1 billion. In other words, the addition of Phu Kham will deliver in the order of a 50 per cent boost to the export earnings of the nation of Laos.
Managing Director Gary Stafford said PanAust will complete its first sale of concentrate from Phu Kham by the end of June, having already delivered its first shipment to its concentrate export stockpile in Thailand.
Gary Stafford: Our concentrate production started in April 2008 and we expect first concentrate sales in June. As Bob iterated, 2008 production will be about 30,000 tonnes of copper, 57,000 ounces of gold and 300,000 ounces of silver. That gold figure assumes a contribution of 30,000 ounces from our Phu Kham Heap Leach Gold Operation.
When we’re in full production in 2009, copper production will double to 60,000 tonnes; gold production will be 80,000 ounces, including a contribution of 20,000 ounces from our heap leach project as gold reserves are depleted; and silver production will move to 600,000 ounces.
From 2010, average annual output will increase to approximately 75,000 tonnes of copper, 65,000 ounces of gold and 600,000 ounces of silver. That expansion will cost us about US$40 million and is scheduled for completion during the December quarter of 2009.
Strong copper and gold prices have boosted PanAust’s cashflow projections for Phu Kham,
In terms of pre-tax cashflows from Phu Kham, you can see that they’re pretty mighty. We brought this project on at very low capital cost, we’re operating at very low cost – second quartile – and you can see [from the graph] at various copper prices and gold prices and silver prices what those revenues will be at a 12 million tonne per annum operation and at 16 million tonnes.
PanAust aims to make Phu Kham the biggest copper producer in Laos, and is targeting production of 100,000 tonnes of copper per annum.
It’s our target to produce 100,000 tonnes of copper per annum from the Phu Kham operation, and on a world scale this is getting very significant.
Conceptual studies are underway, and it’s a tool that I use personally to drive our geologists to make sure we keep looking for copper in and around Phu Kham, to drive our engineers to think of ways of making sure that when we expand the plant from 12 million tonnes to 16 million tonnes that we don’t close out other options, and it’s a way of making sure that we can keep on building growth organically.
Mergers and acquisitions are obviously another thing that we’ll be looking at in the future, but if we can grow organically that’s where we’re going to get the best return for our dollar.
With a five-year strategy to double production to 120,000 tonnes of copper equivalent by 2012, PanAust is set for another year of outstanding growth.
Bob Bryan: Ladies and gentlemen, the past year has seen a doubling of share price and more at a time when the marketplace has not always been kind to aspiring miners, and we anticipate further share price re-rating as the cash flow from Phu Kham copper and gold production starts building up.
Two weeks ago, I had the fun of participating in the official opening of the Phu Kham Copper-Gold Mine – several months ahead of schedule, and within budget. This is a really impressive performance given the chronic shortage of manpower in the industry and ever extending delivery dates for equipment.
Shareholders will be particularly interested in the likely repayment schedule of the capital cost of Phu Kham in view of the strong copper and gold prices. It is likely that the term debt of US$185 million will be repaid by late 2009. That is a stunning achievement for a mine of this size.
Phu Kham is set to contribute a significant increase to exports from Laos, on top of the benefits to the local communities.
The development of Phu Kham will have a major impact on the Lao economy and it is already having a quite massive impact on the local communities.
In terms of the Lao economy, in 2009, which will be our first full year of production at Phu Kham, we anticipate contributing at least US$500 million to Lao exports on the assumption of a copper price of US$3.50 per pound and a gold price of US$800 per ounce.
Now compare that to the total exports from Laos this year of about US$1 billion. In other words, the addition of Phu Kham will deliver in the order of a 50 per cent boost to the export earnings of the nation of Laos.
Managing Director Gary Stafford said PanAust will complete its first sale of concentrate from Phu Kham by the end of June, having already delivered its first shipment to its concentrate export stockpile in Thailand.
Gary Stafford: Our concentrate production started in April 2008 and we expect first concentrate sales in June. As Bob iterated, 2008 production will be about 30,000 tonnes of copper, 57,000 ounces of gold and 300,000 ounces of silver. That gold figure assumes a contribution of 30,000 ounces from our Phu Kham Heap Leach Gold Operation.
When we’re in full production in 2009, copper production will double to 60,000 tonnes; gold production will be 80,000 ounces, including a contribution of 20,000 ounces from our heap leach project as gold reserves are depleted; and silver production will move to 600,000 ounces.
From 2010, average annual output will increase to approximately 75,000 tonnes of copper, 65,000 ounces of gold and 600,000 ounces of silver. That expansion will cost us about US$40 million and is scheduled for completion during the December quarter of 2009.
Strong copper and gold prices have boosted PanAust’s cashflow projections for Phu Kham,
In terms of pre-tax cashflows from Phu Kham, you can see that they’re pretty mighty. We brought this project on at very low capital cost, we’re operating at very low cost – second quartile – and you can see [from the graph] at various copper prices and gold prices and silver prices what those revenues will be at a 12 million tonne per annum operation and at 16 million tonnes.
PanAust aims to make Phu Kham the biggest copper producer in Laos, and is targeting production of 100,000 tonnes of copper per annum.
It’s our target to produce 100,000 tonnes of copper per annum from the Phu Kham operation, and on a world scale this is getting very significant.
Conceptual studies are underway, and it’s a tool that I use personally to drive our geologists to make sure we keep looking for copper in and around Phu Kham, to drive our engineers to think of ways of making sure that when we expand the plant from 12 million tonnes to 16 million tonnes that we don’t close out other options, and it’s a way of making sure that we can keep on building growth organically.
Mergers and acquisitions are obviously another thing that we’ll be looking at in the future, but if we can grow organically that’s where we’re going to get the best return for our dollar.
With a five-year strategy to double production to 120,000 tonnes of copper equivalent by 2012, PanAust is set for another year of outstanding growth.
