Sydney, Nov 29, 2006 (ABN Newswire) - We’re on budget and on schedule with the Phu Kham project. The total capital cost is about (US)$232 million, and that includes a contingency.

We expect to start pouring concrete this quarter (December). Delivery of mills will be September next year. We would start commissioning in the early part of 2008, with first ore through the mills in mid-2008. So we would expect first concentrate shipment in the 2nd half of 2008.

We did this project adopting a copper price of (US)$1.35 a pound and the copper price is over $3 a pound. On our numbers, at $1.35 in our first full production year, we’ll be making annual cash flow of US$50 million per annum. If that copper price happens to be $2.25, cash flow will more than double to over US$100 million. So really we’re not too concerned about the copper price softening to just over $3. From our perspective, that’s still a very good price.

Apart from the construction of the Phu Kham project being on schedule, the other capital item that we announced more recently was the decision to go with owner-operate on the mining equipment.

We decided to go that way simply because in our part of the world, in Asia, there aren’t a large number of mining contractors operating in that region, and over the last year through operating the gold mine, we’ve developed our own expertise in mining operations.

We’re pretty excited about the Puthep project. We first acquired the project in about 1999/2000, and over the last few years we’ve been quietly pushing away at getting all the government approvals required for land access, and to get approval for our work program that we’ve proposed for the project.

The copper project itself is Thailand’s biggest copper deposit and there’s no doubt in my mind that it’s got the potential to be as big as Phu Kham, and therefore be a substantial value-add for the company.

We recently announced the commencement of a major exploration initiative whereby we’re planning to spend (US)$13 million through the December quarter of this year through to the end of 2007.

Already we’ve announced results from early stage exploration work, whereby we’ve intersected significant copper mineralisation at the Tharkhek prospect in the north of our contract area. And 20 kilometres north of Phu Kham, at Pha Nai, we’ve identified the biggest copper anomaly that we’ve ever identified in the contract area.

Production at the Phu Bia gold mine has been disappointing over the wet season.

But at the end of the day, the main value in Pan Australian is in the development of the Phu Kham copper-gold project. And that project won’t be exposed to the risk of wet weather in the same way as the gold mine is, simply because, like many conventional mining projects, at the Phu Kham copper-gold project, all of the ore will be contained in tanks and won’t be exposed to wet weather.

In summary, Pan Australian is eyeing the prize of the Phu Kham copper-gold project, and we’re on track in terms of developing that project on time and within budget. The Phu Bia gold mine has enabled us to recruit a highly talented and skilled and experienced management team which can move from the gold mine into the copper-gold mine.

And furthermore we’ve announced through exploration results and through the success of getting land access to the Puthep copper project in Thailand, that we’ve got a number of other projects in the pipeline which will extend the growth of Pan Australian beyond Phu Kham.