title: open briefing®. pan australian. md explains Pan...

title: open briefing®. pan australian. md explains Pan Australian Resources Ltd
Level 3, Lantos Place
80 Stamford Road
Indooroopilly, Queensland 4068

Date of lodgement: 04-May-2005
Title: Open Briefing®. Pan Australian. MD Explains March Quarterly
Record of interview:
corporatefile.com.au
Pan Australian Resources Ltd. (ASX code - PNA) recently announced that ore
mining had commenced at the Phu Bia Gold Mine, the first phase of your
developments in Laos. 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. What are the latest project economics at that
production rate?
MD Gary Stafford
We mined our first ore in the course of preparing access to the initial pit at the Phu
Kham gold cap deposit and yesterday we started ore mining in preparation for
commencement of crushing and stacking later this month.
The project economics have improved significantly compared with those estimated
in the Feasibility Study. An increase in the ore reserve to just over 8.5 million
tonnes at 1.1 g/t containing about 300,000 ounces of gold1 has enabled us to revise
our mining schedule whilst maintaining a mine life of at least 4.5 years.
This is based on an accelerated schedule for mining compared to the feasibility
study. The feasibility mining schedule was for about 1.5 million tonnes of ore per
annum for the first two years, increasing to 2 million tonnes per annum in year
three but we are confident that we can accelerate this schedule so that we are
producing at the rate of 2 million tonnes per annum by December 2005. This
1 Refer to report on ore reserves to ASX dated 25 November 2004
higher rate could see us producing up to 70,000 ounces in the first twelve months
after ramp-up. If we can achieve these production targets, then the NPV for the
project will be US$18.5 million using a gold price of US$425/oz and a 10%
discount rate (double the feasibility study NPV, which was calculated at a 7.5%
discount rate and a gold price of US$375/oz). The free cash flow over the life of
the project is US$47 million.
At our main project, the Phu Kham Copper-Gold Project, we’re still aiming to
process around 9 million tonnes of ore per annum to produce an annual average of
57,000 tonnes of copper and 50,000 ounces of gold. This will be a big step up
from the Phu Bia Gold Mine in terms of scale of production and capital cost and
the successful development of Phu Kham will increase the value of Pan Australian
quite considerably.
corporatefile.com.au
The first gold pour is now expected in June 2005. Can you explain the further
delay?
MD Gary Stafford
The first gold pour has been pushed back to June because we had an unexpected
problem with the delivery of some electrical components. We’ve secured
alternative supplies but it has pushed the commissioning schedule back by about
three weeks. It’s one of those situations that could not be foreseen and had to be
managed as it arose. However, in terms of construction most of the plant is now
complete with the exception of the electrical cabling and wiring. We anticipate
commencing commissioning of the crusher within the next few days.
We set a tough construction schedule to beat the wet season. This is essential for a
heap leach project in an area that has annual rainfall of over 2.5 metres. I’m
pleased to say that all the areas that would be most affected by rain are now
complete.
If we pour the first gold in June, the period from commencement of construction
of the process facilities to project commissioning will be about six months and that
would be a fantastic achievement.
corporatefile.com.au
What grade profile do you expect for the gold project?
MD Gary Stafford
We will mine higher grade ore in the early stages of the project. The start-up pits
have average grades of 1.4 g/t for the first full year of production and the average
grade over the five year mine life is 1.1 g/t.
corporatefile.com.au
You have an option to move to 100% of both projects from the current 80%. What
is the status of that? What about the Lao Government’s technical review of the
project and their option to take 10% of the project?
MD Gary Stafford
We’re in discussion with Newmont and we’ve agreed in principle on how we can
exercise the option for Pan Australian to move to 100% ownership.
We’re about to commence discussions with the Lao Government about the
agreement under which the Government can take a 10% stake in the project. They
want to improve their understanding of our larger copper-gold project which will
follow the gold project. We will discuss the likely outcomes of the copper-gold
project feasibility study and there are also things in the agreement that either, or
both, parties want to change.
Overall, it’s reasonable to assume that Pan Australian will end up with a 90%
interest in the entire Phu Bia Contract Area which includes both the projects.
corporatefile.com.au
As you’ve said, the Feasibility Study on the Phu Kham Copper-Gold Project
foreshadows the second and much larger development phase of your projects in
Laos. The current mineral resource at Phu Kham is 108 millions tonnes at 0.8%
copper and 0.3 g/t gold. Drilling during the March quarter highlighted further
resource potential. Can you explain how this latest drilling compares with
previous results at the project?
MD Gary Stafford
The ongoing drilling continues to either meet or exceed expectations. The current
resource does not include any mineralisation from the northern extension area;
recent results from this area are looking very good. It was from drilling in the
northern extension area that we recently reported our highest value intercept to
date. This was over two broad intervals separated by about 42 metres of subresource
grade mineralisation. The first intercept started at a depth of only 8
metres and the combined intercepts were over 280 metres at 1.3% copper and 1.2
g/t gold and included an interval of 34 metres at 4.6% copper and 0.7 g/t gold from
a depth of 294 metres.
The drilling certainly emphasises the sort of potential the project has to the north
and also the potential it has at depth. The depth potential is apparent in several
other areas of the deposit and we’ve also discovered other high grade zones during
infill drilling that we previously hadn’t identified.
The purpose of the current drill program at Phu Kham is to optimise the resource
and the economics of the project. Further resource extension work will likely be
undertaken once this infill phase is complete.
corporatefile.com.au
What are the implications of this recent drilling for the size and quality of the
resource at Phu Kham and the scope of the project?
MD Gary Stafford
We’ve been able to identify higher grade areas broad enough to mine
preferentially. In terms of the overall grade of the resource, this material doesn’t
tend to have a great impact because every new high-grade zone we discover also
tends to ‘lift’ adjacent lower grade zones from sub-economic to economic for a net
neutral effect so that the overall grade of the resource will probably remain fairly
constant. The biggest impact will be a significant increase in resource tonnes,
which should provide improved rates of return and profitability.
The purpose of the recent drilling is more about improving the confidence level of
the resource rather than increasing its size. Our main objective is to get most of
the resource into the Indicated category and we have also started infill drilling to
elevate a reasonable amount of the resource into the Measured category by the
time we complete the Feasibility Study. This means that at the end of the
feasibility study we should be able to move most of the resource into Probable
Reserve.
The northern extension area could add between 10% and 30% to the current
resource providing the mineralisation is as continuous and consistent as the
resource area to the south. Our Study is focussed on demonstrating that the
current resource will support an operation that will process around 9 million
tonnes of ore per annum to produce 57,000 tonnes of copper and 50,000 ounces of
gold2. Any resource addition from the northern extension area that we can include
in the Study will be a bonus.
It is worth noting that, although we’re not currently focussed on how large the
system might be, our regional mapping, geochemical work and geophysics
indicate that the system is potentially much bigger than the one we’re currently
drilling for the purposes of the Feasibility Study.
corporatefile.com.au
The Feasibility Study for Phu Kham is on schedule for completion by end August
2005. What concerns or hurdles are you facing?
MD Gary Stafford
We’re on track to complete the Feasibility Study by the end of August. There are
no major concerns or hurdles we can see. We’ll be looking at ways to optimise
the project and ensure that it is robust at low copper prices and we’ll also be
dealing with the normal concerns you have with any feasibility study program. It’s
a porphyry system with metallurgy that requires a typically significant amount of
test work before we finalise the flow sheet. Phu Kham is a big project and we
have to complete the optimisation and feasibility very thoroughly because small
changes in metallurgical recoveries or pit design can make a substantial difference
to the project economics.
corporatefile.com.au
At the end of the March quarter Pan Australian had cash of A$12.8 million and
terms have been agreed with ANZ Investment Bank for an US$8.0 million
revolving corporate loan facility. Do you expect the funding of Phu Kham to be
the next major capital raising? What combination of equity and debt do you
envisage?
2 Refer to June 2004 Quarterly Report to ASX

MD Gary Stafford
We have sufficient cash and debt capacity to be able to commission Phu Bia gold
mine without going to the equity market and we would expect the cash flow from
that project to enable us to complete the Phu Kham feasibility study as well. We
also anticipate that we’ve got sufficient funding to take us through to the stage
when funding is required for the construction of Phu Kham.
We think that the funding for Phu Kham will include a significant debt component.
That was one of the main reasons we arranged the revolving facility with ANZ.
Both parties see it as a precursor to further discussions on financing the coppergold
project.
The capital cost for Phu Kham should be around A$200 million. Our market cap
is currently around A$150 million and, allowing for a significant debt component,
we don’t expect the equity component to be overwhelming. We will look at
alternatives to ordinary equity as well. It’s worth noting that there has been huge
interest expressed in the project by copper traders and smelters and participation
by other mining companies. Our preference is to be the sole developer of Phu
Kham and use conventional funding techniques but we do not intend to limit our
options at this stage and we will retain an opportunistic approach to timing and
open minded philosophy to all funding options.
corporatefile.com.au
Pan Australian entered the S&P/ASX 300 Index and the benchmark S&P/ASX
Small Resources Index on 18 March 2005. What are the implications? Have there
been any significant changes to your share registry?
MD Gary Stafford
We see these indices as stepping stones and we hope to move into the S&P/ASX
200 Index once we establish ourselves as a gold producer and commit to the
development of the Phu Kham Copper-Gold Project. There are a number of
institutions, both domestic and offshore, that have started investing in Pan
Australian now that we’re in the S&P/ASX 300 Index.
Between 25% to 30% of our shares are known to be held by institutional
shareholders; one of these institutions is a substantial shareholder with an interest
of over 8%. We expect greater support from institutions as we commission and
progress our projects.
corporatefile.com.au
Thank you Gary.

The information in this report that relates to Exploration Results 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.
For further information on Pan Australian please visit www.panaustralian.com.au
or call Gary Stafford or Joe Walsh on (07) 3878 9299.
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