December 2007 GS JBWere Copper Conference

PAN AUSTRALIAN
RESOURCES LIMITED
GS JBWere Copper Conference
December 2007
A Prospective Geological Address
Phu Kham
1.8Mt copper
1.2Moz gold
TRUONGSON
TRUONGSON
BELT
BELT
CHIANG MAI
MAI
CHIANG
BELT
BELT
Mae Sot
~2.0Mt zinc
Puthep
0.5Mt copper
LOEI-PHETCHABUN/
LOEI-PHETCHABUN/
LOUANGPHABANG
BELT
LOUANGPHABANG BELT
Sepon
4.5Moz gold
1.8Mt copper
Chatree
4.0Moz gold
28Moz silver
LEGEND
Palaeozoic-Mesozoic
volcano sedimentary
belt - volcanic arcs
Acid igneous
rocks
Mineral endowment data sourced from company websites and quoted historical production
About Pan Australian Resources Limited
¾ Emerging copper-gold miner (ASX:PNA)
¾ Focused on developing the large Phu Kham Copper-Gold Mine,
Laos:
¾ First concentrate production March Qtr 2008; mine life +12 yrs
¾ +200,000t/yr concentrate containing 52,000t copper,
47,000oz gold, 400,000oz silver
¾ Capital cost US$241m (50/50 debt/equity); over 80%
committed by the end of November 2007
¾ Competitive cash unit costs; ~US¢80/lb for 2009 after
precious metal credits1
1 – Price assumptions: US$700/oz gold, US$12/oz silver
Planned Expansion at Phu Kham
¾ Increases annual output to approximately 65,000t copper,
60,000oz gold and 550,000oz silver *
¾ Capital efficient - capital cost US$40m (includes US$7m
contingency)
¾ Maximises value from the anticipated increased Ore Reserve
¾ Revised Ore Reserve and schedule due June quarter 2008
¾ 33% increase in throughput to 16Mt/yr
¾ Additional 6.5MW ball mill, upgraded flotation and concentrate
handling
¾ Completion date December quarter 2009
* Based on 2006 feasibility study operating parameters
Phu Kham Expansion - Cash Flow
Indicative cash flows at various price assumptions *
12Mt/yr
16Mt/yr
Feasibility Study
Expanded
Cu Price
Au Price
US$2.25/lb
US$550/oz
US$110m
US$135m
US$3.15/lb
US$650/oz
US$180m
US$225m
* Silver price assumption US$8.00/oz
Phu Kham Operations – Expanding Production
Phu Kham Copper-Gold Mine
¾ Project ahead of schedule and within budget
¾ Pre-commissioning from December 2007
¾ Concentrate sales from June quarter 2008
¾ Planned expansion by end of 2009 driven by positive drilling
results; likely Ore Reserve increase
Heap Leach Gold operation
¾ Strategic greenfield “starter” project
¾ Operations team, systems and infrastructure established early
¾ June half ’07 cash flow funded group overheads
Phu Bia Mining Ltd
¾ Ownership
Pan Australian 90%, Gov’t of Laos 10%;
to be paid for from future free cash flow
¾ Corporate Tax Rate
25% from first year of profit after realising
tax losses (approx. US$60m at 30/06/07)
¾ NSR Royalty Regime Scaled by metal price between 3% and 6%
¾ Contract Area
2,600km2 of highly prospective ground
~1% of Laos
¾ Tenure
30 years, renewed with each new mine
Phu Kham Deposit Schematic Section
Phu Kham Copper-Gold Ore Reserve *
Tonnes
Cu Grade
Au Grade
Copper Metal
Gold Metal
(Mt)
(%)
(g/t)
(000 t)
(Moz)
Proved
67
0.63
0.28
420
0.6
Probable
77
0.51
0.23
390
0.6
144
0.56
0.25
810
1.2
Category
Total
¾ Exceptionally low strip ratio - 0.6 : 1
¾ Likely Ore Reserve increase – north mine area
¾ Revision of Ore Reserve and schedule in June quarter 2009
Price assumptions: copper US$1.35/lb, gold US$450/oz
* Refer to Competent Person Statement
Competitive on Capital Intensity
Range for
other new
mines
Phu Kham
(Including expansion)
2003 Dollars
(Adjusted for mine cost
inflation of 33%)
Phu Kham copper equivalent assumptions:
Copper US$6,500/t, Gold US$780/oz, Silver US$13.5/oz
Competitive Operating Costs
Copper mine cost curve, 2009
Scenario 2
200
2nd Quartile
Business operating cost (c/lb Cu)
1st Quartile
Assumptions:
Copper price: US$1.00/lb
Gold price:US430/oz
Silver price:US$6.50/oz
Molybdenum oxide price:US$4.56/lb
TC:US$55/dmt
RC:US5.5/lb
Production:52,312t contained Cu
150
100
8th Decile
9th Decile
Business operating cost: US$0.659/lb
50
Phu Kham
0
0
2000
4000
6000
8000
-50
Cumulative production (000t)
10000
12000
Concentrate Marketing
• BHP Billiton – manager of
all concentrate sales
• Exposure to global market
presence and expertise
• Initial spot sales contracts
secured for 2008, combined
TC/RC’s <US$0.03/lb
• Well positioned to supply
custom smelters in SE Asia
Phu Kham Development…..
Gold cap mine and copper-gold pre-strip
Mine office and mobile
fleet workshop
Crusher
Processing plant
…..ahead of schedule, within budget
Operational Readiness - People
¾ Early recruitment of the operations
team is a key to success
¾ Recruitment advantage
¾ New project, growing organisation
¾ Location advantage
¾ Competitive labour costs
¾ Total planned establishment ~1400
Mine site accommodation
¾ Current establishment ~950:
¾ 820 Lao (317 from local area)
¾ 130 expatriates
¾ Leadership training commenced
¾ Trades training successful
Haulage truck driver training simulator
Operational Readiness - Site Works
¾ Civil construction for the processing
plant area and permanent camp
nearing completion
¾ Administration and mining offices
completed and occupied
¾ All major concrete pours completed
¾ Crusher civil works nearing completion
¾ Processing plant construction nearing
completion
¾ Tailings Storage Facility stage 2 works
underway
¾ High voltage power line energised
Phu Kham – Conventional Process Plant
Benefits from 3-D design
Processing plant construction nearing completion
Operational Readiness - Mining
¾ Owner-operate from January 2007
¾ Key mobile fleet in place:
¾ Fourteen CAT777 trucks
commissioned
¾ Further four CAT777 trucks to
be commissioned by end Dec 2007
¾ Two RH90 180-tonne face shovels
¾ Two RH40 120-tonne excavators
¾ Expanded fleet to lift monthly total material moved rate to 1.8Mt
by January 2008
Operational Readiness - Sustainability
Environment
¾ Baseline monitoring in key areas established
¾ Rehabilitation techniques trialled and
reviewed
¾ Systems developing well – Aspects / Impacts
Register, Legal Register and other
management systems
Community
¾ Community Development Plan drafted and on
target for rollout in December 2007
¾ Socio-economic Survey concluded that there
was a “high level of community satisfaction
with Pan Australian’s mining operations”
Organic Growth - A Priority
¾ 2008 expenditure to increase to
US$30m, more than double the
2007 expenditure
Phonsavan
Copper Project
Ban Houayxai
Gold-Silver Project
¾ Strategic project target size;
+35,000t/yr copper or
+100,000oz/yr gold
Pha Nai Copper
Prospect
Phu Kham
Copper-Gold Mine
Puthep Copper
Project
Likely Reserve Upside - North Mine Area
Target area for step-out drilling
A
GDD99: 322m @ 1.1% Cu, 0.2g/t Au fm 8m
inc 34m @ 4.6% Cu, 0.7g/t Au fm 294m
GRD251: 188m @ 1.3% Cu, 0.5g/t Au fm 192m
inc 40m @ 3.4% Cu, 0.4g/t Au fm 340m
GDD231: 44m @ 2.7% Cu, 1.1g/t Au fm 8m
inc 24m @ 4.4% Cu, 1.7g/t Au fm 24m
and 93m @ 0.5% Cu, 0.1g/t Au fm 93m
GDD223: 172m @ 1.0% Cu, 0.6g/t Au fm 70m
inc 32m @ 1.5% Cu, 0.8g/t Au fm 131m
GDD228: 278m @ 0.6%, 0.4g/t fm 6m
inc 20m @ 2.3% Cu, 0.5g/t Au fm 163m
A'
North Mine Area Drilling
High‐grade mineralisation intersected at more than double the designed pit depth
Cross Section A′ - A
Organic Growth - A Priority
Phonsavan
Copper Project
Ban Houayxai
Gold-Silver
Project
Pha Nai Copper
Prospect
Phu Kham Copper-Gold
Mine Expansion Project
Puthep Copper
Project
Ban Houayxai Gold-Silver Deposit
Oxide Resource
South Primary Zone
North Primary Zone
Ban Houayxai Gold-Silver Deposit
Overlain by Oxide/Transitional Mineral Resource#
Primary mineralisation open
6.4Mt @ 1.0g/t for 199,000oz (0.5g/t cut-off)*
below 300m and along strike
#
Refer to Competent Person Statement * Measured: 2.3Mt @ 1.0g/t, Indicated: 3.5Mt @ 0.9g/t & Inferred: 0.6Mt @ 1.1g/t
Ban Houayxai Deposit – North Zone
56m @ 4.9g/t Au Eq from 88m inc.
6m @ 12.9g/t Au Eq from 120m &
6m @ 21.3g/t Au Eq from 136m
98m @ 3.7g/t Au Eq from 176m inc.
20.6m @ 12.8g/t Au Eq from 211m
Gold to silver price ratio assumption: 50 to 1
Organic Growth - A Priority
Phonsavan
Copper Project
Ban Houayxai GoldSilver Project
Pha Nai Copper
Prospect
Phu Kham Copper-Gold
Mine Expansion Project
Puthep Copper
Project
322000 mE
318000 mE
314000 mE
310000 mE
Phonsavan Copper Project
2150000 mN
2150000 mN
KTL
2146000 mN
2146000 mN
318000 mE
314000 mE
310000 mE
1,000 to 10,000
(11)
300 to 1,000 (110)
100 to
300 (215)
0 to
100 (1776)
322000 mE
4 km
Cu in Soils (ppm) NEA Copper Project
¾ KTL, Tharkhek and
Bohr Thong
¾ Potential stand-alone
copper mine project with
central processing facility
Tharkhek
Bohr Thong
¾ Group of copper deposits:
¾ Targeting +35,000t/yr
copper operation
¾ Porphyry-skarn style
copper system
Puthep copper project
¾ PUT 1 Copper Mineral Resource
(0.1% Cu cut-off):
Indicated – 22Mt @ 0.4% Cu
Pha Nai Copper
Prospect
Inferred –
62Mt @ 0.4% Cu
¾ Targeting primary copper-gold
mineralisation below transitional
¾ BFS envisaged to be completed by
end 2008
¾ Bulk flotation concept similar to Phu
Kham being evaluated
Puthep Copper
Project
Pha Nai Copper-Gold-Molybdenum Prospect
¾ 20km north of Phu Kham
¾ High tenor - up to 0.18%
copper soil anomaly
¾ 1.5km x up to 1km within a
4km x 2km halo
¾ Elevated molybdenum (70 to
150ppm) and gold zones
¾ Geophysical survey in
progress
Organic Growth – A Priority
120
Phu Kham expansion
Phu Kham copper
Copper Eq. (t 000's)
100
Phu Kham gold + silver
Five-year growth strategy to
double production.
Potential sources include:
Ban Houayxai gold, Puthep copper
Heap leach gold
80
60
40
20
0
2007
2008
2009
2010
2011
Indicative production profile (100% basis) based on 2006 feasibility study metal-in-concentrate production; includes planned expansion from end 2009
Revised Ore Reserve and schedule in June quarter 2008
Copper Equivalents assumptions - copper US$6,500/t, gold US$780/oz, silver US$13.5/oz
2012
Acquisition And Defence Ready
¾ New opportunity evaluation team led by Joe Walsh
¾ Philosophy – give organic growth a chance but don’t
rely solely on exploration
Important Notice
This presentation has been prepared by the management of Pan Australian Resources 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 a more detailed discussion of risks and other
factors, refer to the Directors' Report in the Company's 2006 Annual Report which has been lodged with the Australian Securities
Exchange, as well as 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.
Competent Person Statement
The data in this report that relates to Exploration Results and Ore Reserves is based on information evaluated by the Competent
Person as identified below. All these persons are affiliated in the capacity indicated with the professional institution shown and have
sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is
undertaking to qualify as a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves (the “JORC Code”). All these persons are full-time employees of the organisation
indicated and consent to the inclusion in the report of the matters based upon their information in the form and context in which they
appear.
Exploration Results
Mr. Richard Hague is a Member of the Australian Institute of Geoscientists (MAIG) and an employee
of Pan Australian
Resources Ltd.
Phu Kham Ore Reserve
Mr Chris Desoe is a Member of The Australasian Institute of Mining and Metallurgy (MAusIMM) and an employee of
Australian Mine Design and Development Pty Ltd.
Calculation of copper equivalent tonnes
Copper equivalent production referred to in this report was calculated by combining copper, gold and silver production using the
following equation:
Copper equivalent tonnes = Copper tonnes + Value of gold produced (US$) + Value of silver produced (US$)
Copper price (US$/tonne)