PANAUST has reported strong March quarter production and cost performances at its Phu Kham and Ban Houayxai operations in Laos. Phu Kham produced a record 21,146 tonnes of copper at a C1 cost of US$1.05 per pound after precious metal credits that include record gold production of 29,745 ounces. The all-in sustaining cost (AISC) was US$1.50 per pound.

The Ban Houayxai Gold-Silver Project produced 24,530 ounces of gold at a C1 cost of US$674 per ounce after quarterly silver credits of 261,268 ounces.

The AISC was US$862 per ounce. These results compare favourably with 2015 full year guidance issued in January 2015.

Looking forward, PanAust expects a near 25% increase in annual copper production from a 2014 base with no further development capital expenditure. Production is expected to continue to rise steadily over the next several years as the average copper head grade increases and improving ore quality lead to further gains in metallurgical recovery rates.

The annual production of copper in concentrate is expected to peak in 2018 and 2019 at approximately 90,000 tonnes. Gold in concentrate is expected to generally range between 70,000 and 75,000 ounces per annum from 2016 onwards. No further development capital is required to underpin this increasing production.

PanAust’s managing director Fred Hess said: “Both operations performed strongly with increased production and reduced costs in the March 2015 quarter.

The organizational changes announced in January 2015 in conjunction with the wave of cost reduction initiatives flowing from the business efficiency review have had a significant and immediate beneficial impact.”

While the initial assessment of savings identified US$50 million in budgeted operating and capital cost improvements per annum across the group, unit cost outcomes in the March quarter suggest that further benefits have been achieved, most notably in mining, shared services and sustaining capital.

C1 costs at Phu Kham benefited from the record gold production. Further cost benefits were achieved as a result of the strong US dollar driving lower prices for key consumables including diesel and the weaker Australian dollar, lowering the expatriate payroll charge and allocated head office costs.

“It’s encouraging to see such clear evidence that unit costs are improving as a result of the planned initiatives under the business efficiency review and also from the stronger US dollar. These excellent results reflect our strategy to maximize returns from producing assets while advancing the Frieda River project through its feasibility study and the regulatory approvals phase,” Fred Hess said.

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