Exploration

Phonsavan Copper-Gold Project

Phonsavan is potentially PanAust's next green-field development in Laos. A pre-feasibility study is underway at the Phonsavan Copper-Gold Project and is expected to be completed mid-2013. Subject to ongoing success with drilling and evaluations, a full feasibility study is expected to be completed by the end of 2013.

The scope of the study is for the development of an open pit mining operation at the KTL copper-gold deposit feeding ore to a conventional milling and flotation process plant with annual processing capacity of circa seven million tonnes and output of approximately 25,000tpa copper and 20,000ozpa of gold in concentrate. The presence of a higher grade zone of skarn mineralisation has been confirmed by recent drilling and may provide an opportunity for increased metal production rates during the early part of the mine schedule.

Scout drilling completed during the March 2013 quarter at the Phu Noum copper prospect, which is located approximately 4 kilometres southeast of KTL, intersected copper-gold mineralisation. Drill hole logging suggests that the Phu Noum prospect has similar geology to that of KTL, including mineralisation styles.

Phu Kham District incorporating Long Chieng Track (LCT), Nam Ve, and Nam San

The Phu Kham district is a high priority target for exploration and resource development. Several exploration targets have been identified in a corridor that stretches at least six kilometres from Phu Kham northwest to the LCT deposit, and beyond to the Nam Ve prospect which is seven kilometres northwest of the LCT deposit.

LCT is located approximately six kilometres northwest of the Phu Kham Copper-Gold Operation. The deposit outcrops and extends over a strike length of approximately 450 metres in a northeast-southwest direction, dipping steeply to the northwest and remains open down-dip and along strike.

The deposit comprises two broad zones of poly-metallic mineralisation associated with a silicified breccia complex that hosts a series of porphyritic intrusions. An upper zone is gold and silver rich while the lower zone contains base metals together with gold and silver.

Drilling has extended the limits of known mineralisation and infill drilling has the objective of increasing confidence in the mineral resource classifications.

The Nam Ve gold prospect is located approximately seven kilometres northwest of LCT. Scout drilling targeted a zone of high-grade gold veins that outcrop in the area and has also intersected zones of copper-gold mineralisation. Drilling suggests a zone of mineralisation that trends southeast-northwest over a strike length of 300m to 400m. The mineralisation appears to be similar in style to that encountered at LCT, with separate precious and base metal phases. Geological interpretation is in progress and will guide the next phase of exploration drilling.

At Nam San, the initial phase of resource definition and exploration drilling concluded in early January 2013. Nam San has been drill tested on 100-metre sections with a nominal 70m sample spacing across the main mineralised zone. Interpretation of the geology and mineralisation controls is continuing and will be incorporated into an inaugural mineral resource estimate.

Regional exploration

PanAust is undertaking regional exploration activities at several identified prospects within the Company’s Contract Area of over 2,600 square-kilometres in Laos. The Contract Area remains under‐explored and highly prospective for copper and gold. It offers excellent potential for the discovery of significant new resources as the basis for organic growth of the business.