announcement in, page-2

quarterly report Quarterly Report
for the three months ending 31 March 2005
Highlights
Phu Bia Gold Mine Construction
• On target to be developed within the budget of US$15.3 million
• Ore mining commenced
• Unanticipated material supply problems resolved with all equipment delivered or
en route to site
• Ore crushing and stacking scheduled to commence in May with gold production now
scheduled to commence in June
• Ramp-up to the initial annual mining rate of 1.5 million tonnes for annual production
of over 50,000 ounces of gold remains on track for the September 2005 quarter
Phu Kham Copper-Gold Project
• Feasibility study on schedule for completion by the end of August 2005
• Drilling during the quarter highlighted further resource potential.
The known boundary of the deposit was extended 100 meters to the north with the
highest value1 intersection to date in hole GDD099 (reported subsequent to quarter’s
end), which intersected two broad resource grade (>0.3% copper) intervals separated
by 42 metres of sub-resource grade mineralisation for a cumulative interval of:
�� 280 metres at 1.3% copper and 0.2 g/t gold from a depth of 8 metres including
a peak interval of 34 metres at 4.6% copper and 0.7 g/t gold from a depth of
294 metres
In the southern end of the deposit, high-grade intercepts were encountered along the
western contact of the deposit, including:
�� 32 metres at 1.3% copper and 4.6g/t gold from 66 metres down hole
Corporate
• Terms have been agreed with ANZ Investment Bank for an US$8.0 million revolving
corporate loan facility
• Pan Australian entered the S&P / ASX 300 Index and the benchmark S&P / ASX
Small Resources Index on 18 March 2005
• At the end of the March quarter Pan Australian had cash of A$12.8 million and no debt
1 Value based on copper and gold grade as well as mineralised interval above a 0.3% copper cut-off at a copper
price of US$1.00/lb and a gold price of US$400/oz. No account of the relative depth of mineralisation is
factored into this assessment.
2
Phu Bia Gold Mine, Laos
(Pan Australian 80% with option to increase to
100%)
The Phu Bia Gold Mine represents the first
phase of a planned two phase development of
Pan Australian’s assets in Laos.
Construction
Construction costs for the Phu Bia Gold Mine
are running within the total budget of US$15.3
million. At the end of March all major items of
proprietary and fabricated equipment had been
delivered to site and erection of all parts of the
process plant were well advanced. Construction
of the heap leach pads is complete and drainage
pipes installed.
Unanticipated supply problems with the
delivery of miscellaneous electrical distribution
components, while now resolved have impacted
on the original commissioning schedule.
Commissioning of the crusher/stacker system
will start in May with first gold pour scheduled
for June. Ramp-up to full gold production
remains on schedule for the September quarter.
Essential works necessary to eliminate the risk
of rainfall and run-off erosion of the heap leach
pads and the process ponds have been
completed with the laying of impermeable liners
before the onset of the wet season (usually
occurs between June and September).
Mining
The Phu Bia Gold Mine comprises three
deposits with mining for the first two years
focused on the Phu Kham gold cap deposit
before development of two satellite pits at the
Long Chieng Track (LCT) and Ban Houayxai
deposits (Figure 1).
This mining schedule will realise the benefits
during the first two years of mining of very low
strip ratio (0.2 to 1) and elevated grade (up to
1.5 g/t gold) ore blocks identified at the Phu
Kham gold cap deposit. The Phu Kham gold
cap overlays the much bigger Phu Kham
copper-gold deposit and therefore the mining
schedule will also accelerate the effective prestrip
of the copper-gold deposit.
The mining contractor has completed
construction of the haul road from the Phu
Kham deposit to the process plant. Mining
commenced in March, with first ore from Phu
Kham delivered to the run-of-mine ore pad,
adjacent to the crusher.
Resource Extension Drilling Program
The Company has decided to postpone the
resource extension drilling program planned for
the LCT and Ban Houayxai deposits until after
the wet season. This postponement will enable
the Company to allocate drill rigs to the higher
priority and more accessible Phu Kham coppergold
deposit.
Phu Bia Gold Project Background
Key parameters identified by the feasibility
study completed and previously reported in July
2004 (with an ore reserve upgrade previously
reported in November 2004) are (100% basis):
• Ore reserve: 8.55 million tonnes at
1.1 g/t for approximately 300,000 ounces
of contained gold
• Processing rate: 1.5 million tonnes per
annum (Mtpa) increasing to 2.0 Mtpa in
Year 3
• Mine life: 5 years
• Gold production: plus 50,000 ounces per
annum approx.
• Pre-production capital costs: US$15.3
million (10% accuracy)
• Cash operating costs: US$230/oz
approx. life of mine.
• First two years approx. cash operating
costs: • Low strip ratio: 0.6 to 1
• Royalty: 2.5%
• Internal Rate of Return*: 36.2%
• NPV at 7.5% discount*: US$9.2 million
* Key financial data modelled at US$375/oz
gold price (before tax and 100 percent equity
basis). The project will also benefit from tax
free and reduced tax periods.
3
Phu Kham Copper-Gold Project, Laos
(Pan Australian 80% with option to increase to
100%)
The second phase of the Company’s plan for a
two phase development of its Lao assets is
represented by the Phu Kham Copper-Gold
Project.
Feasibility Study
The full feasibility metallurgical testwork and
plant design programs started early in the March
quarter.
A preliminary design of the tailings storage
facility and a stability analysis for the proposed
waste dumps has been completed. Detailed
geotechnical assessment works for the tailings
storage facility and the proposed open pit are
scheduled for the June quarter.
The Company has also commissioned a road,
rail and port logistics study that will identify the
most cost-effective options for getting coppergold
concentrate to market.
Pit optimisation results support the potential for
a viable copper-gold operation based on mining
ore from a very low strip ratio open pit to the
production of a copper-gold concentrate through
flotation.
An environmental and social impact assessment
study is well advanced, with an initial
environmental evaluation report completed and
presented to the Lao Government in March.
The feasibility study remains on schedule for
completion in late August 2005. The study will
seek to confirm the results from a Preliminary
Study, reported to the ASX on 5 March 2004.
That study indicated the potential for the Phu
Kham copper-gold deposit to support an
economically viable mining and processing
operation at processing rates of 9 Mtpa and
12.5 Mtpa.
Resource drilling
During the quarter, five drill rigs continued to
operate on the initial phase of infill resource
drilling. By mid-March the entire known
deposit, which currently has a strike length of
1,300 metres, had been drilled on a 100 metre
by 100 metre spacing. It is anticipated that this
spacing will enable an Indicated mineral
resource to be identified and reported for most
of the deposit. Infill drilling has now
commenced with the objective of enabling a
Measured mineral resource to be identified over
part of the deposit.
Assays are pending for part of the ‘Indicated
resource’ infill drilling program in the north of
the current Resource Area and for much of the
Northern Extension Area (see Figure 2).
During March the pre-collar for drill hole
GRD98 demonstrated that mineralisation
continues at least 100 metres north of the
currently defined resource envelope.
Subsequent to quarter’s end assays were
received for the entire GRD98 drill hole, as well
as that for GDD99 (Table 1), with the latter
returning the highest value intercept of any drill
hole from the project to date (for further detail
see ASX announcement of 15 April 2005).
These results highlight the presence of a
shallow broad zone of high-tenor copper-gold
mineralisation, which remains open to the north.
This zone appears to overlie or be juxtaposed to
a deeper zone of high-grade mineralisation.
This second broad mineralised interval down
hole represents the highest grade intercept to
date in primary mineralisation over such a
significant width.
Another important feature of the Phu Kham
copper-gold deposit highlighted during the
March 2005 quarter, was the indication from
several drill holes, including GRD75 of another
higher grade zone along the western flank of the
southern part of the Resource Area. It is
envisaged that such high-grade zones will
enable the Company to optimise production
plans and add significant value to the Project.
By the end of the quarter drilling operations had
progressed onto the final phase of infill resource
drilling, aimed at increasing the confidence of
the Mineral Resource by promoting part of the
Indicated material into the Measured category.
This program involves infilling the existing
100 metre spaced holes at 50 metre intervals on
existing sections and 100 metre intervals on the
4
new sections. It is anticipated sufficient drill
density will be achieved to promote a portion of
the Mineral Resource into Measured category
by late August 2005, when the Project
feasibility study is scheduled for completion.
Table 1: Selected drill data Phu Kham copper-gold
All depth intervals represent down-hole distance drilled at an
angle of 60 degrees from horizontal
Exploration, Laos
(Pan Australian 80% with option to increase to
100%)
During the quarter a plan was compiled for an
initial 15 hole drill program to test for strike
extensions to the current drill-identified
mineralisation at KTL near the town of
Phonsavan (see Figure 1). An exploration
office has been established in Phonsavan and by
the end of the quarter site access for the first
drill pads had commenced. These works
include clearance of unexploded ordinance from
the last Indochina war.
Puthep Copper Project, Thailand
(Pan Australian earning 51% from Padaeng
Industry with options to increase up to 70%)
The joint venture completed discussions with
Thai government officials to agree a set of
conditions to be applied to the feasibility study
drilling program. This followed Thai Cabinet
approval for land access, which was received
last year.
Pan Australian has a budget to commence the
first phase of the feasibility drilling program
during the current half-year to June 2005 but is
awaiting final government approval to
commence the program and this is likely to
cause the postponement of the program until the
December quarter (after the wet season).
Hole No.
(hole depth)
Interval
(m)
Depth From
(m)
Copper Grade
(%)
Gold Grade
(g/t)
Peak Copper-Gold (Cu-Au) Intervals
GRD80
(254m)
72
24 1.2 0.7 8m at 4.3% Cu and 1.3g/t Au from 26m
GRD98
(229m)
46
24
34
6
10
82
128
222
1.0
0.5
0.4
0.6
0.4
0.2
0.4
0.3
8m at 2.0% Cu and 0.5g/t Au from 28m
GDD99
(349m)
142
138
8
192
0.7
1.9
0.1
0.3
18m at 1.8% Cu and 0.1g/t Au from 120m
12m at 2.2% Cu and 0.3g/t Au from 242m &
34m at 4.6% Cu and 0.7g/t Au from 294m
GRD75
(112m)
32 66 1.3 4.6 10m at 1.5% Cu and 10.1g/t Au from 76m
5
Corporate
Cash Position and Share Capital
At 31 March 2005 Pan Australian had cash of
$12.8 million and no debt.
The issued capital of the Company at 31 March
2005 was made up as follows:
635,122,590 Ordinary fully paid shares
32,700,000 Unlisted options
In March terms were agreed with ANZ
Investment Bank for a US$8.0 million two-year
term revolving corporate loan facility. This
facility will contribute to working capital for the
Company as it commissions and then ramps up
production at the Phu Bia Gold Mine and
completes the feasibility study on the Phu Kham
Copper-Gold Project.
Indexation
On 18 March Pan Australian became a
constituent of the S&P / ASX 300 Index and the
benchmark S&P / ASX Small Resources Index.
Corporate Information
Directors
Robert Bryan…........Non-executive Chairman
Gary Stafford………….…Managing Director
Nerolie Withnall…….Non-executive Director
Andrew Daley……….Non-executive Director
Registered & Principal Office
PO Box 1009, Indooroopilly Qld 4068
Telephone: (07) 3878 9299
Facsimile: (07) 3878 6955
Stock Exchange Listing
Australian Stock Exchange Code: PNA
For Further Information Contact:
Gary Stafford Managing Director
Joe Walsh GM Corporate Development
Pan Australian Resources Limited
PO Box 1009, Indooroopilly Qld 4068
Telephone: (07) 3878 9299
Facsimile: (07) 3878 6955
Email: [email protected]
Website: www.panaustralian.com.au
Shareholder Enquiries to:
Computershare Registry Services
PO Box 523, Brisbane Qld 4001
Telephone: 1300 552 270
Facsimile: (07) 3229 9860
Website: www.computershare.com.au
The information in this report that relates to
Exploration Results and Mineral Resources for the
Phu Kham Copper-Gold deposit is based on
information compiled by Dr. Ralph Child, who is a
Fellow of The Australasian Institute of Mining and
Metallurgy. Dr. Child is a full-time employee of
Pan Australian.
Dr. Child has 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 Exploration Results, Mineral
Resources and Ore reserves” (the JORC Code).
This report is issued with Dr. Child’s consent as to
the form and context in which the Exploration
Results appear.
6
Figure 1. Project location map and tenement area, Laos
7
Figure 2. Drill plan Phu Kham Copper-Gold – indicates resource and extension drilling areas
RESOURCE
AREA
NORTHERN EXTENSION
AREA
200 100
metres
0
LEGEND
Pan Australian drillhole
Mineralised porphyry system
Resource area
Extension drill area
GRD098: 46m @ 1.0%, 0.4g/t fm 10m
and 24m @ 0.5%, 0.2g/t fm 82m
GDD99: 142m @ 0.7%, 0.1g/t fm 8m
inc 18m @ 1.8%, 0.1g/t
and 138m @ 1.9%, 0.3g/t fm 192m
inc 34m @ 4.6%, 0.7g/t
GRD94: 58m @ 0.6%, 0.3g/t fm 2m,
26m @ 0.5%, 0.2g/t fm 78m
and 64m @ 0.5%, 0.3g/t fm 134m
GDD86*: 244m @ 0.5%, 0.3g/t fm 6m
GRD51: 24m @ 1.4%, 0.5g/t fm 302m
GRD43*: 92m @ 1.1%, 0.4g/t fm 26m
inc 14m @ 2.1%, 0.5g/t
GRD45*: 228m @ 0.9%, 0.3g/t fm 24m
inc 26m @ 2.0%, 0.7g/t
GDD27: 64m @ 1.1%, 0.4g/t fm 32m
inc 14m @ 3.0%, 0.6g/t
GRD75: 32m @ 1.3%, 4.6g/t fm 66m
inc 10m @ 1.5%, 10.1g/t
GDD25: 81m @ 1.0%, 0.4g/t fm 138m
inc 29m @ 1.7%, 0.7g/t
Hole No: interval (m) @ Cu grade (%), Au grade (g/t) from depth (m)
inc interval (m) @ Cu grade (%), Au grade (g/t)
All holes drilled at a 60 degree inclination to the east (90 degree azimuth)
unless shown otherwise
* Combined interval ^ Drilled to the west (270 degree azimuth)
GRD83*: 212m @ 0.9%, 0.3g/t fm 18m
inc 6m @ 2.7%, 0.9g/t
GDD89: 58m @ 1.1%, 0.2g/t fm 28m
inc 6m @ 3.5%, 0.7g/t
GRC181: 131m @ 0.7%, 0.3g/t fm 18m
GDD29*: 292m @ 1.0%, 0.5g/t fm 22m
inc 55m @ 2.3%, 1.3g/t
GDD30*: 98m @ 1.1%, 0.5g/t fm 30m
inc 8m @ 3.3%, 1.6g/t
GDD21: 180m @ 1.0%, 0.4g/t fm 30m
inc 22m @ 2.0%, 0.7g/t
GDD33: 42m @ 0.9%, 0.3g/t fm 20m
inc 8m @ 2.2%, 0.7g/t
GDD26: 140m @ 0.8%, 0.3g/t fm 34m
inc 8m @ 1.7%, 0.6g/t
GDD34*: 144m @ 0.7%, 0.7g/t fm 8m
inc 12m @ 1.4%, 0.6g/t
GDD32*: 138m @ 1.8%, 0.7g/t fm 36m
inc 16m @ 8.4%, 1.2g/t
GRD100: 22m @ 1.4%, 0.4g/t fm 80m
inc 10m @ 2.0%, 0.8g/t GRD105: 12m @ 2.3% fm 56m
GRD77: 34m @ 2.1%, 1.9g/t fm 56m
inc 16m @ 3.7%, 3.2g/t
GDD90: 18m @ 1.0%, 0.4g/t fm 58m
and 56m @ 0.6%, 0.3g/t fm 170m
GDD52^: 42m @ 1.7%, 0.3g/t fm 96m &
156m @ 1.0%, 0.5g/t fm 188m
inc 12m @ 1.8%, 0.9g/t
GDD53: 88m @ 1.1%, 0.7g/t fm 140m
GRD80: 72m @ 1.2%, 0.7g/t fm 24m
inc 8m @ 4.3%, 1.3g/t
GDD095: 72m @ 0.9%, 0.3g/t fm 66m
inc 10m @ 1.9%, 0.4g/t