gsjbw recommendation

Goldmans still positive with Buy recommendation and 12 month target of 70 cents


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Key Take Outs:

• Whilst PNA has not lowered 2H09 EBITDA guidance US$85m -
US$100m, it has lowered FY09 production guidance to ~53kt (was 60kt
+/- 5% GSJBW 57kt).
• Further, PNA has advised that cash costs in 3QFY09 will be higher than
the US91¢/lb 1H09 (GSJBW was US$95¢/lb).
• In-fill drilling in the southern extension at Phu Kham has confirmed ore
grade mineralisation at least 150m below the current pit shell. The new
resource estimate in early FY10, will incorporate this drill information.
• PNA is on schedule to complete the Ban Houayxai (gold) feasibility
study in early 2010 and expects at least a 6 year (aiming for 10 year)
mine life and will include primary ore as well as the oxide/transition
ore.


Recommendation - Our thinking

Whilst PNA is not guiding to lower 2H09 EBITDA of US$85m - US$100m, the fact that copper
production is below the lower limit of previous guidance is clearly negative and PNA will need
to meet this target and the FY10 target of 60kt +/- 5% (GSJBW 62.6kt) if the company is to
be given a premium rating.
Growth projects should add considerably to the outlook for PNA, but the key data point the
market is focussed on is meeting production guidance. This downgrade once again highlights
the "single mine risk" and highlights the need to add additional production operations in
order to be better able to meet targets.
We retain our BUY recommendation the 12 Month Price Target to $0.70.
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