credit suisse broker report

Rating OUTPERFORM*
Price (24 Jul 08) 0.82 (A$)
Target price (12M) 1.50 (A$)
Market cap: 1,171 (A$mn)
Year avg. monthly trading value 145 (A$mn)
Last month�fs trading value 126 (A$mn)
Projected return:
Capital gain (%) 84.0%
Gross yield (%) 0.0%
Total return (%) 84.0%
Excess return** (%) 57.2%
52-week price range (A$) 0.51-1.24


First con sale and JunQ preview
�¡ Event: PNA has announced the first sale of a shipment of copper-gold
concentrate. A 10kt concentrate shipment has been sold to a Chinese
smelter at a combined TC/RC of less than US$0.03/lb (equivalent to a
TC/RC of US$10/t of concentrate and US$0.01/lb of copper, versus
benchmark of US$47/t and US$0.047/lb). By the end of July, PNA will have
produced 5kt of copper, in line with our expectation of 30kt for 2009.
�¡ View: Relative to the commissioning woes of Lumwana, and most other
projects we have observed over the past five years, PNA’s experience to
date at Phu Kham has for us been impressive. Material movements of over
1mt in June indicate that the operation can get through the required tonnes
mined in wet conditions.
�¡ Outlook: The immediate outlook appears strong for PNA, with the following
events imminent: a resource upgrade at Puthep, which has been
considerably de-risked thanks to the resolution of Kingsgate’s northern
leases saga this week; a resource upgrade at the Ban Houayxai gold
prospect, with pre-feasibility results to follow.
�¡ PNA is likely to release its JunQ report on Monday (there is some chance
this will slip to Tuesday). We expect a benign report, with no operating cost
data from the newly completed Phu Kham operation. All results will have
been capitalised until the project switched to operating status on 1 June and
the first month’s cost data will not be representative.
�¡ Valuation: PNA looks inexpensive, at 4x forward earnings.

PNA has announced the first sale of a shipment of copper-gold concentrate. A 10kt
concentrate shipment has been sold to a Chinese smelter at a combined TC/RC of less
than US$0.03/lb (equivalent to a TC/RC of US$10/t of concentrate and US$0.01/lb of
copper, versus benchmark of US$47/t and US$0.047/lb). By the end of July PNA will have
produced 5kt of copper, in line with guidance of 30kt for 2009.
Relative to the commissioning woes of Lumwana, and most other projects we have
observed over the past five years, PNA’s experience to date at Phu Kham has for us been
impressive. Material movements of over 1mt in June indicate that the operation can get
through the required tonnes mined even in wet conditions. The copper market remains
very tight. The challenges of supply growth were further underscored yesterday with news
that production at Escondida can be expected to fall by 10–15% in 2009 and remain at
that level.
PNA looks inexpensive, at 4x forward earnings, with the foundations of a strong operating
track record.
The immediate outlook appears very strong for PNA, with the following events imminent: A
resource upgrade due at Puthep, which has been considerably de-risked thanks to the
resolution of Kingsgate’s northern leases saga this week; a resource upgrade at the Ban
Houayxai gold prospect and pre-feasibility results. PNA is likely to release its JunQ report
on Monday (there is some chance this will slip to Tuesday). We expect a benign report,
with no operating cost data from the newly completed Phu Kham operation.