copper fundamentals supportive of higher price

Blue sky – PanAust: Phu Kham ramping up, upgrading our target to A$0.55ps
PNA has executed an efficient ramp-up at Phu Kham and is now optimising copper
recoveries. Production is at a smaller scale, although margins are healthy with cash costs of
~US$0.85/lb. Capacity will be expanded from 2011 and we see upside to the 12-year mine
life from increased resources. PNA holds enviable exploration acreage in a favourable
mining jurisdiction in Laos. The Ban Houayxai gold project is the next mine in the pipeline,
and we believe PNA offers the best exploration upside of its copper peers. We upgrade our
target price for PNA to A$0.55ps after de-risking our valuation for Phu Kham.