PanAust to Resume Copper Drilling in Laos, Expects Record Price


By Anna Stablum

Sept. 17 (Bloomberg) -- PanAust Ltd., owner of the second- largest copper mine in Laos, is resuming a planned expansion after the metal surged this year and expects the price to reach a record by the end of 2010.

Drilling will start next month after a one-year halt, Managing Director Gary Stafford said yesterday in an interview in London. The Brisbane, Australia-based company suspended exploration when prices slumped as the world entered its deepest recession since World War II.

“We are very confident on prices going forward,” Stafford said. “The underpinning trend is upward.”

PanAust strengthened its finances by raising A$143 million ($125 million) in a share sale in June and selling a 19.9 percent stake to Guangdong Rising Assets Management Co. for A$216 million, he said. The resumed drilling may enable the company to extend the Phu Kham copper and gold mine’s life beyond 12 years, according to Stafford.

“If we find something significant, maybe we need to build a new plant,” he said.

Copper rose to a record $4.2605 a pound ($9,393 a metric ton) in May 2008 on the New York Mercantile Exchange’s Comex unit before plunging 67 percent by the end of the year. The price has more than doubled this year, and the rebound is likely to continue, said Stafford. Copper may climb as high as $4.50 a pound by the end of next year, he said.

Shares Climb

Futures for December delivery fell 2.5 cents, or 0.9 percent, to $2.9115 in electronic trading on Comex at 11:41 a.m. London time. PanAust shares rose 0.5 Australian cent, or 1 percent, to close at 50 cents in Sydney. The stock has jumped more than sixfold this year, increasing the company’s market value to A$1.17 billion.

PanAust expects to produce about 60,000 tons of refined copper a year at Phu Kham, rising to 70,000 tons by the second half of 2012, according to Stafford. He forecast gold output of between 50,000 and 60,000 ounces this year and silver production of 300,000 to 400,000 ounces.

The metals producer last year continued a so-called feasibility study of its Ban Houayxai gold and silver project, located 25 kilometers (15 miles) west of Phu Kham.

“We are looking to conclude the feasibility study by the end of next year,” Stafford said, adding that production may start in 2011’s second half. “We will be producing about 125,000 to 135,000 ounces of gold and about 800,000 ounces of silver per annum.”

To contact the reporter on this story: Anna Stablum in London at astablum@bloomberg.net.
Last Updated: September 17, 2009 06:56 EDT