article regarding financing

Hopefully this provides some clarity for people.

PanAust sees clear skies ahead - 2008-12-01
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http://www.highgrade.net/article/2008-12-01/PanAust_sees_clear_skies_ahead



EMERGING copper producer PanAust is very confident short term debt it owes to
Goldman Sachs JBWere (GSJBW) is a non-issue for it despite the blowtorch being
applied to a number of companies in the past month.

The $US80 million facility with GSJBW, which is repayable between the end of
February and early July next year, is subordinate to the $US185 million senior
project facility provided by 10 banks led by ANZ.

"Because it is subordinate to the senior facility, it means that GSJBW
interests are aligned with PanAust's, and therefore provides some significant
incentive to roll the facility over, notwithstanding the facility being
refinanced by another party," PanAust's general manager corporate development
Joe Walsh told HighGrade.

Repayments of the senior facility begin in 2009 and run for six years.

Walsh indicated PanAust was considering multiple options and talking to a
number of groups about refinancing. He also reinforced claims by other resource
companies (such as nickel hopeful Mirabela) that funding remains available for
quality projects.

"There's a very select few banking groups that are viewing these market
circumstances as an opportunity to forge better relationships and develop
business," Walsh said.

Still, while the economic and copper pricing environment are poles different to
the situation earlier this year when the 12 month facility with GSJBW was
agreed, PanAust's Phu Kham copper-gold project in Laos continues to look a
quality addition to the world copper supply club. An analyst site last month
visit resulted in RBC describing the project as "humming" and ramping up very
smoothly.

"The $US241 million Phu Kham operation is hitting all targets," RBC said. "The
mill reached the 12Mtpa target in July and August and regularly exceeds it. The
planned 1500tph rate has been at 1600 (sometimes higher) and overall mill
recovery for copper was 71% in October versus plan of 73% in calendar 2009. The
target for calendar 2008 of 25,000t copper metal is achievable in our view and
cash cost guidance of US90c/lb copper in 2009 appears reasonable. Current cash
costs are about $US1.20/lb and we incorporate 2009 guidance into the model."

According to PanAust, production for 2009, the first full year of production,
is targeted to be 240,000 dry metric tonnes of concentrate containing 60,000t of
copper, 60,000oz of gold and 600,000oz of silver. An expansion in 2009 will
increase annual production to an average of 300,000 dry metric tonnes of
concentrate containing 75,000t of copper, 65,000oz of gold and 600,000oz of
silver from 2010.

New offtake agreements are understood to be imminent.