ban houayxai project

Plus 100,00oz per annum gold mine potential identified
at the Ban Houayxai Project
The Pre‐Feasibility Study (PFS) on the Ban Houayxai Gold‐Silver Project in Laos has identified
the potential to develop a low‐cost operation producing 100,000oz to 130,000oz of gold and
700,000oz to 800,000oz per annum of silver over a minimum six‐year mine life. The Ban
Houayxai deposit is located in the southwest corner of PanAust’s Contract Area in Laos
(Figure 1), approximately 25 kilometres west of the Company’s Phu Kham Operations.
PanAust will now move to complete a feasibility study focussed on the initial open‐pit mining
and carbon‐in‐leach (CIL) processing of the outcropping oxide and near‐surface transitional
mineralisation. Subsequent resource definition and studies will then evaluate the potential
of the substantial, deeper primary mineralisation of the deposit.
The preferred option considered in the PFS was the development of a CIL plant processing
four million tonnes per annum over a six‐year mine life (based on an optimisation of the
current oxide‐transitional mineral resource estimate). The feasibility study will identify the
optimum throughput and plant configuration, while resource drilling will proceed with the
objective of confirming the potential to significantly increase the currently identified oxidetransitional
resource.
The PFS identified the following attractive fundamentals of the Project:
• extremely low strip ratio, estimated at 0.7:1 with no pre‐strip required as the oxide
gold‐silver mineralisation starts at surface;
• extremely soft oxide/transitional mineralisation, which will allow high milling/process
throughput rates;
• free‐milling ore with up to 40% of gold recovered by gravity;
• excellent leach kinetics with test work indicating gold recoveries of +95% and silver
recoveries of +70%;
• 75% of the oxide‐transitional mineral resource (the subject of the PFS) is already in
the Measured and Indicated categories (refer to mineral resource statements below);
and
• cash operating cost estimate net of silver credits of US$330/oz*
*Gold Institute Standard for reporting costs, inclusive of royalties, after silver credits estimated at a silver price
of US$14/oz and before mining equipment lease costs.
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The PFS indicates that development capital will be less than US$130 million. The PFS also
considered the option of mining and processing oxide‐transitional and primary
mineralisation at a 2.7 million tonnes per annum throughput rate. However, resource
definition of the primary mineralisation is at an early stage and the harder nature of the
primary mineralisation will necessitate additional grinding capacity and therefore a different
approach to comminution circuit design.
It is planned that the Ban Houayxai Feasibility Study will be completed in the September
quarter 2009 and assuming a positive outcome to this study first production is anticipated in
2011.
Funding
Analysis of anticipated cash flows^ from PanAust’s Phu Kham Operations in Laos indicates
that after funding the planned expansion of the copper‐gold concentrator to 16 million
tonnes per annum during 2009 and servicing term debt commitments there will be sufficient
funds sourced from Phu Kham cash‐flow to fund most of the capital required for the Ban
Houayxai Project.
^ Commodity price assumptions: copper US$2.00/lb, gold US$800/oz and silver US$12/oz.
Oxide‐Transitional Mineral Resource Estimate
The oxide‐transitional mineral resource estimate that most closely approximates to the economic cut‐off identified in the PFS is presented below at a 0.4 g/t gold cut‐off: