Phu Kham Operations, November 2013 David Reid, General Manager - - PowerPoint PPT Presentation

phu kham operations november 2013
SMART_READER_LITE
LIVE PREVIEW

Phu Kham Operations, November 2013 David Reid, General Manager - - PowerPoint PPT Presentation

Phu Kham Operations, November 2013 David Reid, General Manager Safety performance zero harm objective Total Reportable Injuries & Frequency Rate Last 12 Months 4 2 1.8 1.82 1.6 Number of Injuries 3 1.4 1.2 TRIFR 2 1 0.8 0.6


slide-1
SLIDE 1

Phu Kham Operations, November 2013

David Reid, General Manager

slide-2
SLIDE 2

Safety performance – zero harm objective

1.82

0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 2 1 2 3 4 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13

TRIFR Number of Injuries

Total Reportable Injuries & Frequency Rate Last 12 Months TRI Occurances 12 Mth TRIFR YTD TRIFR TRI Target 0.05 0.1 0.15 0.2 0.25 0.3 0.35 1 2 3 4 5 6 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13

LTIFR Number of Injuriies Month

Lost Time Injuries & Frequency Rate Last 12 Months LTI Occurances 12 Mth LTIFR YTD LTIFR LTI Target

  • 0.10

0.00 0.10 0.20 0.30 0.40 0.50 0.60

1 2 3 4 5 6 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13

RTIFR Number of Injuries Month

Restricted Work Injuries & Frequency Rate Last 12 Months RWI Occurances 12 Mth RWIFR YTD RWIFR RWI Target

slide-3
SLIDE 3
  • Established operation with competitive

cash costs

  • 2013 production expected to be 62,000t

to 65,000t copper at an average C1 cash costi of approx. US$1.35/lb; total cash costs (incl. royalty, sustaining capital and lease and finance charges) US$2.14/lb for 9 months to 30 Sep 2013

  • Production expected to rise to between

65,000t and 70,000t copper in 2014 and

  • ver 70,000t in 2015
  • 2016 onwards: production rates to

increase progressively to a peak of approximately 90,000t in 2018 and 2019

Phu Kham Operation – Outlook Summary

i: C1 direct operating costs, based on payable copper in concentrate produced, after precious metal

  • credits. Assumes DecH2013 prices of US$1300/oz gold and US$20/oz silver.

Data shown on a 100% equity basis.

slide-4
SLIDE 4
  • Commenced production 2008: 12Mtpa

nominal capacity exceeded

  • Process plant expanded in 2012 to

16Mtpa nominal: processing rates exceeding design on transitional ores

  • Increased Recovery Project completed

2013 ahead of schedule and under budget: recovery performance exceeding design for ore types processed

  • Potential for further mine and mill
  • ptimisation
  • 2013 Ore Reserve estimate confirmed

10-year mine life

  • Phu Kham district exploration upside

Phu Kham Operation – Overview

Data shown on a 100% equity basis.

slide-5
SLIDE 5

Phu Kham: progressive upgrades

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

slide-6
SLIDE 6
  • Mill processing rate to increase from

12Mtpa by 33% to a design capacity of 16Mtpa on primary ore

  • Commissioned in the SepQtr2012; quick

ramp-up; record throughput achieved in December 2012 demonstrating high throughput rates at 21Mtpa, running at 18Mtpa rates in 2013

  • Timed to offset a decline in head grades as

deeper primary ore is mined and processed

  • Grinding and flotation capacity increased by

50%; collectively deliver 2% absolute improvement in copper recovery

  • Capital cost within the US$95M budget

Phu Kham: Upgrade Project

Data shown on a 100% equity basis.

slide-7
SLIDE 7
  • Increased recovery achieved through less

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

  • Project completed April 2013, several

months ahead of schedule and under budget

  • Utilises existing plant technology: low

technical risk, rapid payback

  • Metallurgical recovery performance to

date is exceeding design model expectations for copper and gold based

  • n ore types processed

Phu Kham: Increased Recovery Project

Data shown on a 100% equity basis.

slide-8
SLIDE 8
  • Expecting an average 6% absolute

increase in copper and gold recovery

  • Actual recovery rates achieved will

depend upon ore type (S:Cu ratio) and production strategy including grind size vs throughput rate trade-off; moderate positive correlation with copper grade

  • S:Cu ratio expected to decline (11-13) as

the proportion of primary ore increases

  • Minor increase in unit processing costs

due to power and grinding media required for the second regrind mill….

  • …increased metal production is expected

to reduce C1 cash cost by more than 5%; capital cost under budget by $10m

Increased Recovery Project

10 20 30 40 50 60 70 80 90 10 20 30 40

Copper recovery (%) Sulphur : copper ratio

10 20 30 40 50 60 70 80 90 0.3 0.4 0.5 0.6 0.7

Copper recover (%) Copper grade (%)

Charts show actual daily performance data from July 2013 onwards.

slide-9
SLIDE 9
  • Crusher bottleneck at 18 to 18.5Mtpa
  • n softer ore, examining options to

improve

  • SAG mill capacity ~20Mtpa
  • Original plant design required a

pebble crusher in order to maintain nameplate throughput on primary ore

  • Evaluating options to improve in-pit
  • re fragmentation (mine to mill

studies) and improving crusher

  • perating time to allow optimal SAG

mill operation

  • Opportunity to circumvent crusher by

providing crushed ore from satellite pits – KTL & LCT potential – and low- grade stockpiles

Throughput optimisation

Data shown on a 100% equity basis.

slide-10
SLIDE 10
  • Geotechnical instability detected in the

interim pit west wall in December 2012

  • Revised mine schedule necessitated

lower grade transitional ore to be prioritised thereby delaying access to higher grade ore in the pit floor

  • Average copper head grade for

2013/2014 is expected to range from 0.45% to 0.50%

  • Interim wall slope angle being reduced;

no change to final pit wall design

  • The interim west wall failure was mined
  • ut from January to October 2013, new

walls established

Open-pit

slide-11
SLIDE 11
  • Revised life of mine plan developed;

copper production to progressively increase to a peak of around 90,000t in 2018 and 2019

  • Ore processing rate of 18Mtpa expected to

be sustained

  • Phu Kham open pit mine life remains 10

years (from start of 2013) at a copper price

  • f US$3.00/lb
  • Potential for mineralisation from satellite

deposits close to Phu Kham and near Phonsavan to augment mill feed and/or extend mine life

Revise mine plan: October 2013

Data shown on a 100% equity basis.

slide-12
SLIDE 12
  • Material movements of approx. 50Mtpa from

2014 to 2016 then reducing; additional mine shovel and drill required in 2014; LOM strip ratio of 1.2:1

  • Low-grade stockpile strategy developed

reducing effective strip ratio in high material movement years

  • Truck fleet scheduled to increase from Q1

2016 by six trucks as haulage distances increase with open-pit depth

  • Accounting standard amended for 2013:

deferred waste mining costs now limited to waste mining relating to future mining areas

  • Approximately US$23.3M (or 8.1Mt) of waste

stripping for 2013 is expected to be capitalised

Material movements and strip ratios

Mining pit stages Mining areas (red) in 2014

Data shown on a 100% equity basis.

slide-13
SLIDE 13
  • Progressive TSF wall lifts have

historically been a significant component of sustaining capital at Phu Kham

  • Implementation of floating discharge
  • f tailings and continuous discharge
  • f decant water in 2012 has led to a

revised TSF construction schedule

  • Annual sustaining costs for 2013 –

2015 are expected to reduce significantly but will vary depending upon requirements for accommodating waste as a construction material

Tailings Storage Facility

Data shown on a 100% equity basis.

slide-14
SLIDE 14

0.31 0.28 0.26 0.22 0.32 0.08 0.08 0.07 0.09

Labour Fuel Process power Grinding media Maintenance, mill liners and

  • ther spares

Explosives Reagents Tyres Other

Total on-site operating costs: US$1.71/lb (before credits)

Site costs for the 9 months to 30 Sep 2013

slide-15
SLIDE 15
  • Current production fleet comprises:
  • 48 CAT777D 100t trucks
  • 2 PC3000 & 2 RH90 face shovels
  • 2 PC2000 excavators
  • Reconciliation: ore processed to Ore

Reserve; project to late 2012:

  • -6% contained copper
  • +4% contained gold
  • +24% contained silver
  • -5% ore tonnes
  • Low LOM strip ratio: 1.2:1 based at a

US$3.00/lb copper price

  • Mining costs: US$2.50/t – US$3.00/t,

average $2.60/t

Mine and ore body performance

Tonnes/month

500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 Apr-08 Nov-08 Jun-09 Jan-10 Aug-10 Mar-11 Oct-11 May-12 Dec-12 Jul-13

Total material mined Ore mined

Extreme rainfall events

slide-16
SLIDE 16
  • Design process plant capacity of

16Mtpa has been exceeded on softer transitional ores, site uses a blending regime (S:Cu, hardness)

  • End Sep 2013 YTD average

processing rate of 2,244t/hr versus design 2,000t/hr

  • Ball mill Bond work index range

10-17 kWh/t

  • Primary grind: P80 of ~90μm
  • Regrind: P80 of ~30μm
  • Processing cost: averaging

US$6.50/t

Process plant performance: ore milled

Tonnes/month Tonnes/hr

500 1,000 1,500 2,000 2,500 3,000 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 1,800,000 2,000,000 Apr-08 Nov-08 Jun-09 Jan-10 Aug-10 Mar-11 Oct-11 May-12 Dec-12 Jul-13

Ore milled Mill throughput rate (t/hr)

Data shown on a 100% equity basis.

slide-17
SLIDE 17

Process plant performance: Cu recovery

Cu Recovery Cu Grade

  • Scheduled ore head grades have

declined as primary ores are mined and processed

  • Recoveries reflect the mix of ore

types processed

  • Transitional ores; metallurgical

complexity limits recovery rates

  • Higher recoveries achieved on

primary ore types

  • Current LOM average ore split:

~15% transitional, ~85% primary

0.0% 0.1% 0.2% 0.3% 0.4% 0.5% 0.6% 0.7% 0.8% 0.9% 1.0% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Apr-08 Oct-08 Apr-09 Oct-09 Apr-10 Oct-10 Apr-11 Oct-11 Apr-12 Oct-12 Apr-13 Oct-13

Copper recovery Copper head grade

slide-18
SLIDE 18
  • Typical Phu Kham concentrate

specification:

  • 22% - 25% copper
  • 5g/t - 8g/t gold
  • 30g/t - 100g/t silver
  • <0.5% arsenic
  • Variability in output during steady-

state production largely reflects head grade

Process plant performance: output

Tonnes

5,000 10,000 15,000 20,000 25,000 30,000 35,000 Apr-08 Oct-08 Apr-09 Oct-09 Apr-10 Oct-10 Apr-11 Oct-11 Apr-12 Oct-12 Apr-13 Oct-13

Conc produced

slide-19
SLIDE 19

Concentrate marketing

  • Well positioned to supply custom smelters

in Southeast Asia

  • Copper-gold concentrate trucked to

Sriracha Harbour in Thailand or Vung Ang in Vietnam for export; haulage cost ~US$95/t (Sriracha) ~US$87/t (Vung Ang)

  • Approximately 83% of planned sales to the

end of 2014 are under a mix of long term and spot sales agreements with internationally recognised traders and smelters

  • Majority of current and next 3 years

production committed to contracts

  • Between 50% and 90% of the copper price

exposure hedged based on provisional invoice pricing

Phu Kham to Sriracha Harbour ~1,000km Phu Kham to Vung Ang ~630km

slide-20
SLIDE 20
  • On track to meet 2013 production of 62,000-

65,000t copper in concentrate at an average C1 cash cost will approximate to the upper end

  • f guidance (US$1.35/lb)
  • Revised life of mine plan developed; copper

production to progressively increase to a peak

  • f around 90,000t in 2018 and 2019
  • Major capital phase now concluded: benefits

flowing from the expansion and increased recovery projects together with lower scheduled sustaining capital is expected to enhance cash flow

  • Exploration upside in the Phu Kham district

provides the potential for additional sources of mill feed

Phu Kham Outlook

Data shown on a 100% equity basis.

slide-21
SLIDE 21

Ban Houayxai Operations, November 2013

Dr Jon Gaunt, General Manager

slide-22
SLIDE 22

Safety performance – zero harm objective

Ban Houayxai Lag Indicator 12 Month Trends 12 Months from October 2012 to September 2013:

  • LTIFR = 0.76
  • TRIFR = 4.20
  • AIFR = 8.78
slide-23
SLIDE 23
  • Open pit mining operation feeding a

conventional 4Mtpa CIL / gravity gold plant

  • First gold-silver doré poured 1 May 2012;

commercial production from 1 June 2012

  • 2013 production expected to be 110,000oz

gold at an average C1 cash costi of US$600-US$650/oz after silver credits; total cash cost (incl. royalty, sustaining capital and lease and finance charges) US$863/oz for 9 months to 30 Sep 2013

  • Mine life of over 10 years based on 2013

Ore Reserves estimate

Ban Houayxai Gold-Silver Operation

i: C1 direct operating costs, based on payable copper in concentrate produced, after precious metal

  • credits. Assumes DecH2013 silver price of US$20/oz.

Data shown on a 100% equity basis.

slide-24
SLIDE 24

Ban Houayxai Gold-Silver Operation

  • Admin. Office

Process Plant Open Pit Waste dump To accommodation camp

slide-25
SLIDE 25
  • Production fleet comprises:
  • 7 CAT777D 100t trucks
  • 2 PC1250 from late November
  • Changing the PC2000 for a PC1250
  • Good contained metal reconciliation

between ore processed and the Ore Reserve block model project to date:

  • -3% contained gold
  • -3% contained silver
  • +7% ore tonnes
  • Mining cost ~US$3.25/t - US$3.75/t
  • Zone of high-grade gold-silver

mineralisation extends beneath the current open-pit design; potential target for underground mining

Mine and ore body performance

Tonnes/month

200,000 400,000 600,000 800,000 1,000,000 1,200,000

Total material mined Ore mined

slide-26
SLIDE 26

Open pit current mining

slide-27
SLIDE 27
  • LOM strip ratio of ~1.7:1 based
  • n the 2013 Ore Reserve
  • Over the first six years of

mining the strip ratio is expected to be approximately 1:1 rising to over 2:1 in the last year of mine life commensurate with a cut-back to access deeper ore

  • Low-grade stockpiling strategy:

currently defined open pit depleted after 7 years: low grade stocks processed thereafter

  • Minimal deferred mining costs

Open pit stages and strip ratios

slide-28
SLIDE 28

166 58 92 34 116 34 94 17 147

Labour Fuel Process power Grinding media Maintenance, mill liners and other spares Explosives Reagents Tyres Other

Total on-site operating costs US758/oz gold (before credits)

Site costs for the 9 months to 30 Sep 2013

slide-29
SLIDE 29
  • Design capacity of 4Mtpa; can be

exceeded on softer ores

  • Record processing rate achieved

in September quarter 2013: equivalent to annualised rate of 4.9Mt

  • Focus on milling has delivered

15% improvement in mill throughput for oxide and transition ores against design

  • Processing cost ~US$9.00/t –

US$9.50/t

  • Minimal sustaining capital until

2016/17 when next TSF lift is scheduled

Process plant performance: ore milled

Tonnes/month Tonnes/hr

100 200 300 400 500 600 700 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000

Ore milled Mill throughput rate (t/hr)

Data shown on a 100% equity basis.

slide-30
SLIDE 30

Process plant performance: recovery rates

  • Recovery rates vary according to
  • re type and grade
  • Recoveries of +90% for gold and

+70% for silver on oxide; c.85% for gold and c.60% for silver on transitional ore; gold recovery 75%-80% for harder primary ore

  • Project identified to evaluate

improved recovery on primary ore

  • Silver grade increasing with the

proportion of transitional and primary ore; oxide ore is partly silver depleted

  • 2013/14 production predominantly

transitional ore types (60%)

0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 0% 20% 40% 60% 80% 100%

Gold recovery Gold head grade

0.0 2.0 4.0 6.0 8.0 10.0 0% 10% 20% 30% 40% 50% 60% 70%

Silver recovery Silver head grade

slide-31
SLIDE 31
  • Production profile reflects

increasing silver grades as the proportion of transitional and primary ores processed increases

  • March 2013 production impacted

by SAG mill reline

  • Post-March soft oxide ore has

progressively been displaced by harder transitional ore

  • Mine to mill program is delivering

mill throughput improvements to

  • ffsets the change to harder ores

to maintain gold output

Process plant performance: output

Ounces/month

10,000 20,000 30,000 40,000 50,000 60,000

Gold in doré Silver in doré

Data shown on a 100% equity basis. SAG mill reline

slide-32
SLIDE 32

Additional information

slide-33
SLIDE 33
  • PanAust’s assets in Laos are held

by the Lao-registered entity Phu Bia Mining Ltd (PanAust 90%)

  • 2,600km2 Contract Area held under

a 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

PanAust’s operations in Laos

slide-34
SLIDE 34
  • Corporate tax rate of 25%
  • Royalty payment is based on metal prices - net smelter return royalty i.e.
  • ff-site costs (transport, shipping, TC/RC’s etc) are deductable :

Copper:

  • Up to US$3,000/t – 3%
  • From US$3,000/t to US$4,000/t – 4%
  • From US$4,000/t to US$5,000/t – 5%
  • Above US$5,000/t – 6%

Gold

  • Up to US$450/oz – 3%
  • From US$450/oz to US$500/oz – 4%
  • From US$500/oz to US$600/oz – 5%
  • Above US$600/oz – 6%

Silver

  • Royalty rate % is set by the gold rate

Fiscal regime

slide-35
SLIDE 35

Mining cost 80 Deduct deferred mining costs (14) Inventory adjustments (6) Processing 87 General and Administration 24 Total mine site operating costs 171 Transport, Handling and Marketing 31 Concentrate treatment and refining 20 Total off-site operating costs 51 Precious metal credit (79) Total direct operating costs (C1 cash cost) 144 Royalty 22 Sustaining capital (includes TSF) 33 Lease principal and interest charges 16 Total cash costs 214 Average copper price received (after realised hedging) 339

Phu Kham production costs; YTD Sep2013

Note: costs are based on payable copper in concentrate produced

US¢/lb copper

slide-36
SLIDE 36

Mining 275 Deduct deferred mining costs

  • Inventory adjustments

(60) Processing 398 General and Administration 145 Total mine site operating costs 758 Total off-site operating costs (freight, refining) 11 Silver credit (124) Total Direct Operating Costs (C1 cash cost) 644 Royalty 96 Sustaining capital (includes TSF) 76 Lease principal and interest charges 48 Total cash costs 863 Average realised gold price (after hedging) 1,406

Ban Houayxai production costs; YTD Sep2013

US¢/oz gold

slide-37
SLIDE 37

Ban Houayxai Process flow sheet

slide-38
SLIDE 38
  • 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

slide-39
SLIDE 39
  • 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

slide-40
SLIDE 40
  • PanAust provides a total of US$450,000

annually to the Community Development Funds supporting the communities around Phu Kham, Ban Houayxai and Phonsavan

  • Funding and support for: agriculture,

healthcare, infrastructure, and microfinance and small business development

  • Phu Kham purchases almost 50% of its fresh

produce for the accommodation camp kitchen from local communities

  • PanAust to partner with the Asian

Development Bank in a US$46.6M clean water project to deliver clean water and better sanitation facilities to residents of 11 towns in Laos; PanAust will contribute a US$6M grant

  • ver six years

Sustainable Development

Classroom sessions – market gardening and fish farming Around 50% of food requirements for the Phu Kham camp is sourced locally

slide-41
SLIDE 41
  • Approximately 3,370 employees; ~85% are

Lao nationals

  • Up-skilling of the Lao workforce; PanAust

has developed scholarship and apprenticeship programs in conjunction with colleges, universities and polytechnics in Laos and Thailand

  • PanAust received the 2011 award for Best

Community Development Initiative at the Asia Mining Congress in Singapore in recognition

  • f the positive contribution that PanAust’s

Technical Trades Training program is making to local communities and the greater Lao economy

Laos: employment and training

slide-42
SLIDE 42
  • Full provision for estimated closure costs is

recognised in PanAust accounts and amortised over the life of the operation

  • US$53M provision as at 31 December 2012
  • Estimate is updated annually

Land rehabilitation

slide-43
SLIDE 43

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 only. 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 operational 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 obligation to advise any person if it becomes aware of any inaccuracy in, or omission from, any forecast or to update such forecast.

Important notice