Laos-focused miner PanAust slips despite posting strong result
LAOS-focused miner PanAust expects higher copper output this year but production costs are likely to rise as it upgrades the processing plant at its flagship Phu Kham mine.
Shares in the company backtracked, despite its production report for last year being solid, Ord Minnett senior resources analyst Peter Arden said.
PanAust finished down 13c, or 3.49 per cent, at $3.60.
Mr Arden, who has visited Phu Kham, said investors may have sold down PanAust to get out while the going was good, amid extreme uncertainty in the broader economic environment.
"There's still an awful lot of negativity out there and what we're seeing with PanAust today is probably a reflection of that," he said.
"Investors are so skittish at the moment, they look for excuses to sell when they wouldn't have previously . . . using any good news as an opportunity to get out."
Mr Arden said he was bullish on the company, which had world-class ground formerly held by gold mining majors.
"There's plenty more in the pipeline. They've built the production to 60,000 tonnes (per annum), which is very substantial."
It would be very profitable but "it's not good enough for the market", Mr Arden said.
PanAust produced 59,897 tonnes of copper concentrate at Phu Kham last year.
This was in line with guidance despite severe mid-year rainfall that hampered access to higher grade ores.
PanAust is upgrading Phu Kham at a cost of $US95 million ($90.45m), enabling ore processing to increase, and is timed to coincide with an expected fall in ore grades this year.
The company forecast a lift in output this year to 63,000-65,000 tonnes of copper concentrate, although production costs may rise by up to 14 per cent.
It also reported unaudited earnings before interest, tax, depreciation and amortisation for last year of $US285m, ahead of the release of its full-year financial results in February.
Earnings this year were expected to be between $US340m and $US400m, assuming copper prices of between $US3.50-$US4 a pound.
The copper price is currently about $US3.79 a pound.
The company's second mine, Ban Houayxai in Laos, is being commissioned.
