PERTH (miningweekly.com) – Gold/copper miner PanAust on Tuesday told shareholders that capital savings during the financial year could well exceed the company’s planned $50-million in savings, on higher output from the Phu Kham mine and positive exchange rate spin-offs.

The company, which operates mines in Laos, said a strong US dollar had lowered prices for key consumables and that the weaker Australian dollar had lowered expatriate payroll charges and head-office costs.

PanAust in January announced a targeted saving of about $50-million a year through operating and capital cost improvements, with the miner cutting nearly 5% of its staff numbers.

However, MD Fred Hess noted this week that unit costs outcomes in the March quarter had suggested that further benefits had been achieved, most notably in mining, shared services and sustaining capital.

“It's most encouraging to see such clear evidence that unit costs are improving as a result of the planned initiatives under the business efficiency review, and also from the stronger US dollar we have recently experienced,” Hess noted.

“These excellent results reflect the company’s strategy to maximise returns from its producing assets while advancing the Frieda River project through its feasibility study and the regulatory approvals phase.”

The Phu Kham copper/gold operation, in Laos, produced a record 21 146 t of copper during the quarter ended March, at a C1 cost of $1.05/lb, after precious metals credits that included a record gold production of 29 745 oz.

The Ban Houayxai gold/silver operation, about 25 km west of Phu Kham, produced 24 530 oz of gold, at a C1 cost of $674/oz, after quarterly silver credits for 261 268 oz.

“Both operations performed strongly with increased production and reduced costs in the March quarter. The organisational changes announced in January, in conjunction with the wave of cost reduction initiatives flowing from the business efficiency review have had a significant and immediate beneficial impact,” Hess said.

Yearly production from the Phu Kham mine was expected to increase by nearly 25%, PanAust estimated on Tuesday, with the company saying that the increase in production would not require any additional capital spend. Instead, the average copper head grade at Phu Kham was expected to increase over the next several years, improving ore quality, which would lead to future gains in the metallurgical recovery rates.

Yearly copper production was expected to peak in 2018 and 2019, at around 90 000 t, while gold-in-concentrate would range between 70 000 oz/y and 75 000 oz/y, from 2016 onward.