Phu Kham copper gold project feasibility study released

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    PNA has released the feasibility study for the Phu Kham copper gold project. An optimised/updated feasibility study is to be released in March 2006. Overall, the sentiment was -ve due to:

    - lower production targets: 50ktpa of copper and 50kozpa of gold (previously 60ktpa copper and ~50-70kozpa) due to lower cut-off grade of the orebody.

    - capital expenditure has increased to US$174m plus costs (was US$140m).

    - annual production has thus reduced. However, mining life has increased.

    This resulted in a significant fall in the share price.

    Seems the market has over-reacted: hasn't understood the upside to grades and recoveries from the selective mining. PNA has identified 10% upside to grades from this and is expected to increase as more data becomes available.

    This is solid progress toward the company's goals. A positive re-rating should occur with the expected ramp up of gold operation and as the copper operation moves closer to start-up.

    There will also be leverage on the gold price. There is certainly upside potential in the play.

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