Ann: December Quarter 2009 Activities and Cash Fl, page-21

re: Ann: December Quarter 2009 Activities and... Hi Folks,

I've only just had a chance to really pore over PNA's Dec Q results.

I thought that in order to consolidate my own thoughts and observations I'd post them here, to supplement HT's excellent analysis above.

Firstly the cash build. We reduced debt by USD14mm, and built cash by 19mm, improving 33 mm from a net debt of 7mm to net cash of USD25mm (excl finance leases).

On an annual basis USD 133mm, which on a USD1220 mc is a CF multiple of 9.2.

However we had an Expl &Eval spend of 11 mm, which I interpret to have been mostly growth orientated, so including that back in, USD 44mm for the Q, USD 176mm annualised, and a CF multiple of 6.9. Which imho is a relatively fair multiple if we were only expecting modest growth.

Future debt repayment may only be USD 5.5mm/Q. This quarter included retirement of the working capital facility. Therefore adjusting for the E,E&D spend projected for Mar Q, if we had the same cash flows our debt would drop from 63 to 57mm, and our cash rise from 88 to 118mm USD at 31 March, for a net cash of 61mm.

Exploration budget. This stays at 18mm, as for 09 (although half the 09 was spent in the Dec Q.

Development. Projected as 18.7 for the March Q (allowed for in the cash build above) up from 4mm in Dec Q. This I find VERY NOTABLE. We are moving from high recent exploration spend to development. PROGRESS.

I am finally impressed with our cashflow, and I am now more than convinced we can fund our immediate growth plans from cashflow (and cash in bank).

If we had 4 quarters like the Dec Q, then by 31 Dec we'd have spent USD 74mm on development, have reduced our debt to 41mm, and have increased our cash to USD 232mm.

My guess is getting 4 such quarters is a little too optimistic, and it would be exceeding company forecasts a little, however I believe it does illustrate that we have the financial capacity to match our organic growth opportunities.

One fly in the ointment must be that by the end of the year I guess we might be about ready to be a Lao taxpayer? Therefore I am guessing 2011 will see a drop.

One final point. Someone once upon a time commented on the high admin cost. There is a note with the table that explains this includes ROYALTY. Looks to me about only royalty, so I guess admin must be under exploration or something!

Conclusion - In good financial shape, but probably about fair value if you weren't prepared to pay much for the growth. I think we might be under rating the growth.

Liked the exploration outlook, liked the operational performance.

EL