A solid March quarter production report saw shares in takeover target PanAust (PNA) edge up a fraction yesterday to remain above the $1.71 a share offer from its largest shareholder, Guangdong Rising Asset Management (GRAM).
The shares ended the day at $1.737 after the company revealed it had lifted gold and silver production guidance and slashed cost estimates.
PanAust is a mid level company better known for its copper output, but the quarterly report revealed a solid rise in the production of gold and silver.
Copper, gold and sliver production costs were cut in the quarter, a result, PanAust said reflect(s) benefits realised from the business efficiency review which was announced in January 2015; further cost improvements have been identified and are expected to provide additional future benefits.
Following the strong March quarter performance, which has continued into April, and a review of the production forecast for the balance of the year, 2015 production guidance has been increased for gold and silver, and C1 and AISC cost guidance reduced for both Phu Kham and Ban Houayxai.
2015 guidance for Group production is for copper in concentrate of between 74,000t and 76,000t; gold in concentrate and doré of between 195,000oz and 205,000oz; and silver in concentrate and doré of between 1.4Moz and 1.5Moz.
PanAust also lifted slightly its copper forecast minimum, but the maximum guidance remains unchanged.
PNA 1Y – PanAust lifts production targets
PanAust said that at March 31 it had cash on hand of US$95.9 million after one‐off payments (including redundancy payments) totalling US6.3 million; debt of US$130.0 million (excluding equipment lease facilities); and undrawn debt facilities of US$120.0 million.
The strategy deployed by PanAust management, including the decision to halt dividends in a bid to help fund the Frieda River development project, has recently been criticised by the previous chairman and the previous managing director of the company.
However, the current management took the opportunity to defend the strategy in Wednesday’s March quarter results.
"PanAust is of the opinion that reinvesting the free cash flows from the Lao operating business towards this goal delivers excellent value for its shareholders," the company said.
The strong results come one week after the PanAust board rejected a $1.1 billion takeover offer from its major shareholder Guangdong Rising Asset Management (GRAM).
Directors repeated their previous advice to reject the GRAM offer.
