Pan Australian Resources NL (PNA) – Advancing its Laotian Gold Project Towards Feasibility and Production

• On 14 June 2002, PNA shareholders are to vote on a number of steps that have the capability to materially enhance their company resulting in gold production possibly by December 2004, by approving the acquisition of the Phu Bia coppergold project in Laos from Newmont.
• The results of initial scoping studies suggest that Phu Bia could be capable of producing 70,000ozpa of gold from a 3mtpa heap leach operation advancing into 25,000ozpa of gold and 25,000tpa of copper from a concentrate in a 3mtpa conventional plant, that could later be expanded to 5mtpa.
• Further infill drilling is currently required to complete the pre-feasibility study on Phu Bia and assess the initial processing route as heap leach and/or CIL, with a combined CIL/heap leach route potentially capable of materially higher gold production. The treatment alternatives depend mainly on drilling higher grade targets of 4 to 5g/t at Ban Houayxai and 8g/t at Long Chieng Track, plus the 3 to 12g/t gossans, and deeper copper-gold mineralisation at Phu Kham.
• PNA also still has its Puthep copper project in Thailand on which it is waiting for Cabinet approval in order to advance it to the next stage having completed a viable pre-feasibility study.

Abelle Ltd (ABX) – A Neat, Very Profitable 75,000ozpa or so Gold Mine

• Abelle is operating the old Gidgee mine (that used to belong to Australian Resources (ARS) before that company went into receivership in early 1999), and is currently producing about 75,000ozpa at a cash cost of US$215/oz and total cost of US$260/oz (at an A$ exchange rate of US57c).
• Our initial impression on visiting the mine in mid-November 2001 was that it was capable of generating annual after-tax profit of A$2m to A$10m per year, depending on how well the visible gold in quartz underground was “running”.
• Gold production has the capability to increase materially since about one-third of current production is coming from extremely low 0.8gpt stockpiles which could be replaced by oxide ore (when found) or from increased underground production.
• In our opinion there is in fact significant upside potential for both gold production and life. However, it is more a case of where to start, and which order to take the targets in, and consequently we have used scenario analysis in pages 6 & 7. For example, the current underground life is conservatively 6 years, excluding reopening either Kingfisher or Omega, and a decline is being sunk in Butcherbird.
• Currently the exploration direction is being made towards the potentially more prospective Gidgee anticline, by focusing on already delineated oxide targets and a number of classic exploration “gaps”, before the mill runs out of “soft” ore in about 2 years’ time. An alternative could be to spend possibly $10m more capex and increase underground production so as to replace both the surface sources.
• We have provided profit and cashflow estimates for the scenario range (pages 6 & 7), with ABX’s share price (on a 5% NPV) capable of being between 40c and 105c.

Independence Gold NL (IGO) – Long Nickel Acquisition is part of the Aim to Create Substantial Shareholder Wealth

• The Southstar Database is offering IGO a plethora of opportunities for the creation of individually focused companies.
• The purchase of WMC’s Long nickel mine for $15m under the separately managed Lightning Nickel Pty Ltd is part of IGO’s aim to create substantial shareholder wealth.
• Based on mining only Long and Victor South’s ore reserves of 750,000t at 3.6%Ni for 27,000t of nickel, at a rate of 150,000tpa, IGO’s Nickel management team (headed by Tim Moran) has estimated a 10% NPV of $46m for their attributable nickel. This was based on $60m in after tax cashflow over 5 years, using a nickel price of US$3.15/lb (US$6950/t), and an A$ exchange rate of US55c.
• In our opinion, the 27,000t of Ni should be capable of being exceeded since it excludes almost the same again in the Long orebody’s resources, additional recoverable ore from the pillars (even allowing for geotech), and any possible exploration discoveries.
• Lateral thinking by the IGO team following conceptual viewpoints outside of standard theory has resulted in evaluating two promising 100% owned gold prospect areas called Jeerinah (near Paulsen’s) and Yalgoo West, where initial results have been encouraging.

Zimplats / Makwiro Platinum – Profitably Commissioning Ngezi

• By the end of the June Quarter 2002, following several modifications to the plant (as it had never run as Hartley at full capacity), the concentrator was operating at its 6000tpd design capacity of 2.2mtpa and ZIM was in positive cashflow, its 70% held Makwiro Platinum having produced and sold 18,680oz Pt in the quarter or 38,400oz PGE .
• Given ZIM’s vast landholding containing delineated ore resources, there are significant upside scenarios for Zimplats and its resulting share price. In our opinion, there are 3 key factors influencing ZIM’s future, namely the success of the underground trial at Ngezi, the decision on a new plant probably in 2003, and the integration of Mwakiro and Impala into a simpler corporate structure.
• A study appears likely to occur in 2003 to decide on the scope of the first expansion which could involve a doubling of production. The first expansion may be influenced by the progress of the trial underground mine, as to what mix occurs with possibly a new open-cut further north.
• The underground mining at Ngezi has the advantage of having time on its side to develop a mining method since the open-cut is currently supplying the mill requirement of 2.2mtpa, and it can base its design on the (AQP/IMP) Mimosa mine to the south which has spent 6 years refining its underground mining method.

Hill End Gold Limited – Expecting to Generate Cashflow by mid - 2003.

• The IPO Offer : Hill End Gold Limited (HEG) is offering a subscription of 17.5m shares at 20c to raise $3.5m (minimum subscription 13m shares raising $2.6m) to reopen the old Hill End goldfield in NSW. As part of the offer, 1 free option (exercisable at 25c before 30 June 2005) is to be issued for every 2 shares subscribed.
• HEG is very aware of the pitfalls that some of the later 1980 or so syndicates were trapped under, and hence intend to generate cashflow as soon as practically possible, aiming by Mid - 2003, should the IPO attain its minimum raising (and preferably closure) by the end of December 2002.
• HEG has an extensive line of strike of old workings (about 27km or so) on which to explore, so it has the potential to have a very long life. Although it is focusing on the old workings and the stope fill and unmined areas for its initial production, it has to be remembered that the veins are “open” at depth.
• It has to be recognised that this is a nuggetty distribution in which it is extremely difficult to determine expected grades before the plant has been in production for as long as a year or so, at the same time it also has to be noted that nuggetty distributions can produce spectacular results, as have occurred in the past.
• The grade of the stope fill is thought to be in the region of 4 to 6gpt, but could be much higher since extraction techniques were fairly archaic, as illustrated by Silver Orchid mining Golden Gully (which lies north of the Hill End township) and reputedly only achieving a 50% recovery treating 300t of 2oz/t ore using its stamp battery in 2000.