Growth by discovery, acquisition and development Corporate - - PowerPoint PPT Presentation

Growth by discovery, acquisition and development

Corporate presentation, February 2014

• Phu Kham Copper-Gold and Ban Houayxai

Gold-Silver Operations providing strong cash flow to support dividends and growth

• Phu Kham brownfield opportunities to

progressively lift annual copper and gold

• utput:
• Process plant capacity expanded in 2012;

Increased Recovery Project 2013

• Copper production to increase steadily to

peak at approx. 90,000tpa in 2018/19

• Pre-development opportunities:
• KTL Copper-Gold Project, Laos
• Inca de Oro Copper-Gold Project, Chile
• Frieda River Copper-Gold Project, PNGi

Production and growth

i: The agreed acquisition of a majority interest in the Frieda River Project remains subject to a condition precedent.

• Established operation with competitive

cash costs

• Process plant expanded in 2012:

processing rates exceeding upgraded 16Mtpa plant design rate

• Increased Recovery Project completed in

Jun quarter 2013: step change in recoveries achieved

• Copper production to increase steadily to

peak at approx. 90,000tpa in 2018/19

• 2013 production of 64,885t copper at an

average C1 cash costi of US$1.36/lb; all- in sustaining costsii US$2.37

Phu Kham: a foundation for growth

i: C1 direct operating costs, based on payable copper in concentrate produced, after precious metal credits. ii: C1 cash costs plus royalties; corporate support and shared services costs; sustaining capital; lease principal and interest charges; and deferred mining and inventory adjustments capitalised. Data shown on a 100% equity basis.

Phu Kham: 16Mtpa Upgrade and Increased Recovery Project

2nd regrind mill six additional cleaner cells 2nd filter 3rd transformer 2nd ball mill Increased flotation capacity 16Mtpa Upgrade Project Increased Recovery Project

• Increased recovery achieved through less

selective rougher flotation together with increased regrind, cleaner flotation and concentrate handling capacity

• Project completed June quarter 2013,

several months ahead of schedule and under budget

• Record recovery performances during the

December half 2013; copper 74.9% (up from 71.1% for June half 2013); and gold 50.3% (up from 40.9%)

• Copper recoveries for 2014 are scheduled

to range from 74% to 86% depending upon ore quality

Phu Kham: Increased Recovery Project

Data shown on a 100% equity basis.

Ban Houayxai Gold-Silver Operation

• Established operation, competitive costs
• 2013 production of 112,546oz gold at an

average C1 cash cost of US$611/oz after silver credits; all-in sustaining costs of US$964/oz

• Pervasive zone of high-grade gold

mineralisation extends beneath the current pit design

Ban Houayxai Gold-Silver Operation

Data shown on a 100% equity basis

Phu Kham district

1000m

N

Phu Kham Nam San Haul Road prospect LCT deposit Nam Ve; 7km NW of LCT

• High priority target for exploration
• Prospective for copper-gold and gold-

silver mineralisation

• Extends from Phu Kham at least 14km to

Nam Ve

• Includes the LCT deposit
• Nam Ve - scout drilling intersected high-

grade gold and copper-gold mineralisation

• Other near-mine targets at Phu Kham to

be drill tested in 2014

Core shed prospect

• Study largely completed on the low

capital cost development option to truck high-grade copper mineralisation to Phu Kham for processing

• Close to existing road and power

infrastructure; nearby town of Phonsavan could provide a workforce

• Delivery of crushed ore to the Phu

Kham process plant will bypass that

• peration’s crusher constraint
• Ore Reserve estimate reported as a

subset of the Phu Kham Ore Reserve

KTL Copper-Gold Project, Laos

Data shown on a 100% equity basis.

• Joint Venture with Codelco (PanAust 60.45%)
• Sulphide feasibility study completed in mid-

2012; provided strong production in first five years

• Study extended to evaluate the potential for

existing oxide and additional sulphide resources, including Carmen (PanAust 100%), to make a material contribution to the Project

• Considering options for project scale: from a

down-scaled higher grade 9Mtpa processing rate to an expanded 18Mtpa processing rate

• Initial evaluations favour the smaller, higher

grade approach which should provide improved operating costs over the first ten years of project life

Inca de Oro Copper-Gold Project, Chile

• Carmen deposit (PanAust 100%):

positive results from resource drilling

• Porphyry-style mineralisation

discovered, overprinting earlier IOCG mineralisation

• Near surface low strip ratio open-pit
• pportunity

Carmen copper-gold deposit, Chile

Benefiting from existing infrastructure

Frieda River Copper-Gold Project

Frieda River Mineral Resources

HIT deposit: M I & I Resources of 2,090Mt @ 0.45% Cu, 0.22 g/t Au Koki copper-gold deposit Ekwai copper-gold deposit Nena deposit: M I & I Resources of 45Mt @ 2.55% Cu, 0.60 g/t Au

Mineralisation

• pen at depth

Mineralisation

• pen at depth

Mineralisation intersected by drilling

• PanAust has entered into a share sale and purchase agreement with

Glencore Xstrata plc to acquire its shares in Xstrata Frieda River Ltd (XFRL)

• Initial cash consideration of US$75M in two tranches: US$25 million upon

transaction close; and US$50 million on 31 December 2015

• On successful completion of a project development a 2% NSR royalty

becomes payable that will not exceed US$50 million

• Completion of the acquisition is consistent with PanAust’s strategy to ensure

access to sufficient mineral resources to secure the Company’s growth beyond the life of the Phu Kham Operation in Laos

• The likely timing for implementation of PanAust’s development concept for

Frieda River coincides with rising production levels scheduled for Phu Kham

The PanAust Glencore Agreement

• Average annual production of 100,000t copper and 160,000oz gold in

concentrate at a C1 cash cost of approximately US$1.25/lb after gold credits*

• Open pit mine with low strip ratio of less than 0.6:1
• Mill feed of 430M tonnes grading 0.54% copper and 0.3g/t gold for an 18-year

mine life; represents 20% of the HIT Mineral Resource

• Metallurgical recoveries of 80% to 85% for copper and 70% to 75% for gold
• Development capital estimate**: US$1.5Bn to US$1.8Bn; competitive capital

intensity of approx. US$13,000/t of annual copper equivalent production

PanAust scoping study results

*Gold credit estimated at US$1,200/oz **2013 dollars

• PanAust’s commitment to sustainable

development is a key consideration in the way the Company undertakes its business activities

• Strong emphasis on delivering sustainable

benefits to the communities within the vicinity of its operations

• Further information on PanAust’s

sustainability programs and credentials, including the latest Sustainability Report, can be viewed at the Company’s website

Strong commitment to sustainable development

Around 50% of food requirements for the Phu Kham camp are sourced locally PanAust’s community development programs have a strong focus on education

• EBITDA expected to be between US$200M

and US$225M assuming a copper price of between US$3.20/lb and US$3.40/lb, US$1,300/oz gold and US$22/oz silver

• Group consolidated production of 65,000t

to 70,000t copper, 160,000oz to 165,000oz gold and approx. 1.2Moz silver

• Phu Kham copper production of between

65,000t and 70,000t at an average C1 cash cost of between US$1.50/lb and US$1.60/lb

• Ban Houayxai gold production of

approximately 100,000oz at an average C1 cash cost of between US$650/oz and US$700/oz

2014 financial performance and outlook

Data shown on a 100% equity basis.

• Competitive copper and gold producer

with strong cash flow to support growth initiatives

• Increased free cash flow following

conclusion of major capital development program

• Progressive increase in copper

production at Phu Kham; peaking at

• approx. 90,000tpa in 2018/19
• Organic growth provided by capital

efficient brownfield opportunities and pre-development opportunities in Laos, Chile and PNG

• Proven track record as a successful

developer of operations

Summary

Supplementary slides

• Listed on the Australian Securities Exchange (ASX:PNA)
• Issued securities (20 Feb 2014)

621M shares 0.6M unlisted options & rights

• Share price (20 Feb 2014)

A$1.895

• Market capitalisation

A$1.2Bn

• 12-month average daily turnover

~A$10M

• FY2012 dividends paid

Total A$0.07/share FY2013 dividends Total A$0.06/sharei

• Substantial shareholders

Guangdong Rising Assets Management (GRAM) ~22.5% Goldman Sachs Asset Management ~5.2%

• Shareholding structure

~71% institutional investors (incl. GRAM)

• Top 20 shareholders

~58%

PanAust Limited securities

i: Final dividend of A$0.03/share to be paid in April 2014

• Cash of US$130.3M
• Debt of US$162M; undrawn facilities of US$113M
• Facilities comprise: US$250M revolving debt facility with a syndicate of

seven banks; a US$25M working capital facility

• Four-year term (from Jan 2013); interest rate of US LIBOR plus a fixed

margin of 3.5%/yr on revolving facility (plus political risk insurance)

• Equipment lease facilities drawn to a total of US$67.7M
• Gearing (debt/debt+equity) of 18%

Financial position as at 31 December 2013

• March 2013: PanAust received the 2013 Sustainability Leadership Award at the Asia Mining

Congress in Singapore in recognition of PanAust’s program to create and support business

• pportunities within the villages closest to the Company’s mining operations in Laos
• Previously at the Asia Mining Congress, PanAust received awards for “Best Community

Development Initiative” in the Southeast Asia category for:

• 2011 – The positive contribution that PanAust’s Technical Trades program had made to

local communities and the greater Lao economy

• 2010 – PanAust’s Livelihood Improvement Programme designed to assist sustainable

development of the local communities

• December 2011: PanAust received the Government of Lao PDR Labour Order Class 1

Award for the “best development in a rural area” for the Company’s outstanding contribution to rural socio-economic development and poverty eradication

• December 2011: PanAust received the Ethical Investor magazine 11th Sustainability Award

within the social and community category in recognition of the Company’s Livelihood Improvement Program that is designed to assist the sustainable development of the communities around the Phu Kham Copper-Gold Operation in Laos

Award winning sustainability performance

• PanAust’s commitment to sustainable development is a key consideration in

the way the Company undertakes its business activities and incorporates a strong emphasis on delivering sustainable benefits to the communities within the vicinity of its operations.

• Further information on PanAust’s sustainability programs can be viewed at the

Company’s website www.panaust.com.au

• Sustainability Report 2012: PanAust uses the reporting requirements of the

Global Reporting Initiative (GRI) G3, and reports to an A+ Application Level. To achieve this rating the report has undergone external verification prior to publication.

• PanAust’s Sustainability Report and GRI index are available on PanAust’s

website at www.panaust.com.au/reports The 2012 Assurance Statement provided by the external agency (ERM-Siam, Co Ltd) is incorporated into the report.

Strong commitment to sustainable development

• Good operating environment, stable

government

• Ready access to key infrastructure: power,

water, road

• Mineral Exploration and Production

Agreement (“MEPA”) – sets out approvals process for project development, operating framework and fiscal regime – mine development fast track

• 30-year tenure refreshed with each new mine

development

• 25% company tax rate and net smelter return

royalty of 3% to 6%

• GoL owns 10% of Phu Bia Mining Ltd,

PanAust’s Lao-registered entity

Laos: a great place to operate

• Phu Kham copper-gold concentrate is

trucked to ports in Vietnam and Thailand for export to custom smelters

• Concentrate sold under a blend of

frame and spot price contracts to both custom smelters and metals traders

• The Company manages short-term

and provisional price risk (over the quotational period) on copper sales through swaps and fixed price agreements with customers

Concentrate sales

This presentation has been prepared by the management of PanAust Limited (the 'Company') for the benefit of brokers, analysts and investors and not as specific advice to any particular party or person. The information is based on publicly available information, internally developed data and other sources. No independent verification of those sources has been undertaken and where any opinion is expressed in this document it is based on the assumptions and limitations mentioned herein and is an expression of present opinion

• nly. No warranties or representations can be made as to the origin, validity, accuracy, completeness, currency or

reliability of the information. The Company disclaims and excludes all liability (to the extent permitted by law), for losses, claims, damages, demands, costs and expenses of whatever nature arising in any way out of or in connection with the information, its accuracy, completeness or by reason of reliance by any person on any of it. Where the Company expresses or implies an expectation or belief as to the success of future exploration and the economic viability of future projects, such expectation or belief is based on management’s current predictions, assumptions and projections. However, such forecasts are subject to risks, uncertainties and other factors which could cause actual results to differ materially from future results expressed, projected or implied by such forecasts. Such risks include, but are not limited to, exploration success, gold and copper price volatility, changes to the current mineral resource estimates, changes to assumptions for capital and operating costs as well as political and

• perational risks and governmental regulation outcomes. For more detail of risks and other factors, refer to the

Company's other Australian Securities Exchange announcements and filings. The Company does not have any

• bligation to advise any person if it becomes aware of any inaccuracy in, or omission from, any forecast or to update

such forecast.

Important notice