Re: PNA - Pan Australian Resources
OK few reasons, firstly read the below posted by blackburn.
"PNA currently has 754m shares issued for a market capitalisation of approximately $181m. As at December 31 they had cash of $3.4m and debt of $5.3m.
PNA are developing their assets in a stage by stage process. The Phu Bia Gold mine was commissioned successfully in November 2005 and a ramp up in production is scheduled for completion in March. Phu Bia has a resource of 12.8mt@1.0g/t au for 424,000 ounces. Reserves are 8.6mt@1.1g/t au for 300,000 ounces.
The capital cost for this mine was $15.3m and importantly came within budget (these guys are smart operators imho!) Capital Payback for the mine should be achieved by August 2006. PNA are hoping to produce +60,000 ounces this year and are just about unhedged for full leverage to rises in the price of gold.
This production is crucial and will help the next stage of development for PNA… the ‘real’ company maker of Phu Kam. The Phu Kam copper gold project is currently at BFS stage and a completed BFS is expected in March. Commissioning of the mine (assuming a successful BFS) will occur at the end of 07 with full production in mid 2008.
Resources at Phu Kam are 160.1mt@0.66% Cu 0.9g/t Au. This equals 1.5m ounces of gold and 1,055,000 tonnes of copper. The in pit resource is expected to be 100mt@0.65% Cu 0.3g/t Au.
Capex is expected to be $US174m and PNA hope for payback to be achieved after less than 4 years of mining. Annual production is expected to be 50,000 ounces of gold and 50,000 tonnes of copper. Peak production is expected to be 90,000 ounces of gold and 67,000 tonnes of copper in 2008/9. The strip ratio of this project is a low 1:1 and I would anticipate a very positive BFS.
PNA also have an option to acquire 70% of the Puthep Heap Leach Copper Project. This project contains 84mt@0.44%Cu. Capex for this project is expected to be around $US95m and capital costs are expected to be 71c /lb.
Other exploration programs are also occurring with excellent drill results from the Phu He Silver/Gold prospect.
These projects are located in Laos and country risk is not very big imho. Oxiana has proved how successful operations in this country can be and the government/people are largely supportive of resource companies.
Overall, PNA appear to be an excellent opportunity for excellent growth over coming months/years. Management have shown they can succeed with Phu Bia and now it is time to tackle the larger project in Phu Kam. I will not go into a detailed valuation in this post… however I believe that PNA could be worth multiples of current prices if gold and copper continue rising and are hitting highs in 2008/9... If anyone doubts it play with some numbers yourself and it will become obvious
This is one of the better leveraged stocks to the resources boom and it has been overlooked imho. How long will this last?
Coming soon also will be the case for another company with a slightly more problematic past in LAF... lets see if that case can be pulled off...
" Quote as per posted by Blackburn.
Now consider Fridays anouncement re: the aproval of Phu Kam - this is huge news as Kham will likely produce 100,000 ounces of gold a year - now compare this to copper. At 50,000 tonnes per assume Which equals over 200million profit being conservative, valuing gold under 500USD and ounce and copper similarly undervalued.
Now keep in mind the majority of this comes from exposure to copper which looks like it is in its early stages of a bull run, analysts everywhere have upped their targets for copper to a greater degree than gold even. JBwere before Phu Kham aproval value this stock at 40c with copper at half its current price. I imagine seeing that they've upped those predictions from 1:40 to closer to $3.00 the valuation will be closer to 50c. Giving 200million in copper revenue each year alone.
As a ST trade it is likely to go up. Weekly charts show a lot of indecision which will be resolved monday on the anouncement one way or another. Instos will move this stock, credit suise have already stamped a sizeable position pre-empting positive numbers, most others seem more wary however the aproval of this project with good numbers and insane gold and copper prices will see this indecision stamped out.
2million shares were smashed near fridays high in the minutes before close on friday, certainly the buyers owned fridays trade. I guess its upto you if you want to buy in at discount and speculate that the figures would be good or pay a premium if they are and you miss out.
I've decided to hedge my risk and buy half my position on friday and half after seeing the figures but ultimately its upto you. As a stock with a history of being volatile I'd expect short term gains could be huge. Risk is minimal from 0.27c, only risk I can see is if the financing is worse than expected. Ultimately its been on most brokers and instos radars for months now and tomorrows d-day!!!!
Goodluck to all that hold,I'm hoping it comes off as its my stock tip for this month. If I can emulate last months results I'll be more than happy!
Regards for now
powwww