Top public companies 2010: Panaust

MARCH 2010

PANAUST Limited (PNA) has a market capitalisation of more than a quarter of the annual GDP in the country where it operates, but with strong commodity prices and production the Brisbane-based company is set to keep on growing this year.

Managing director Gary Stafford, says production at PanAust’s Phu Kham mine in Lao PDR is on track to boost copper production by more than 11 per cent this financial year.

“Our forecast for 2010 is to produce between 60,000 tonnes and 63,000 tonnes, which is significantly more than the 54,000 of copper we produced in 2009,” says Stafford.

“It always takes time to get to capacity when you start a new mine, but at Phu Kham we’ve been at capacity for the last three or four months.

“In revenue terms, at $3 a pound we expect an EBITDA at $224 million – we’re looking at about $400 million of revenue from copper and on top of that over 43,000 ounces of gold, so at $1000 an ounce that’s another $43 million.”

In the company’s profit guidance it included a conservative possibility that the copper price could fall to $2.50 a pound, but Stafford believes it could even go as high as $3.50.

PanAust shot through the rankings from 21st position in last year’s edition of Brisbane’s Top Public Companies, but Stafford says the move represents a return to stability.

“Our market capitalisation has bounced quite a lot in the last 18 months – in the middle of 2008 we were at around $1 billion but after the GFC we went to below $200 million, but this year we’re back above $1.3 billion,” he says.

“Much of that has been following the price of copper, however in the last few months there have been some concerns of a double dip in the economy, but what we’re seeing in our business is very good demand for copper coming from the smelters.

“We’re returning to consistency with cost of inputs, a level of consistency not seen for six to nine months.”

Stafford plans to start one or two more growth projects this year and bring more debt into the company to help fund projects in Lao.

“The two projects we’re currently reviewing in Lao are the expansion of Phu Kham and also a gold-silver deposit in Ban Houaiyxai.”

PanAust employs 1700 staff in Lao and Stafford says the government has a small bureaucracy which is efficient to work with.

Managing director: Gary Stafford
Market capitalisation: $1.3 billion
Forecast Growth ’10: 27%
Revenue ’09: $390.7 million
Profit ’09: $26 million
Staff: 1730
Established: Listed 1987

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