Pan Australian starts ore milling at Laos mine

SYDNEY, March 31 (Reuters) - Pan Australian Resources Ltd (PNA.AX: Quote, Profile, Research, Stock Buzz) said on Monday it had started ore processing earlier than expected at its copper and gold mine in Laos, sending its shares up 4 percent.

The company said it had begun drawing on more than 750,000 tonnes of stock piled ore for feed to two mills it has built at the Phu Kham mine, allowing it to progressively move toward maximum production targets earlier than a previously targeted mid 2008 date.

In early trading, Pan Australian rose as high as A$1.025 and was 2.4 percent up at A$1.005 around midday, while the S&P/ASX200 was down 0.4 percent after earlier gains were erased. Pan Australia has been included in the index since August 2007.

The Phu Kham mine, which also contains silver and is only the second of its kind in communist Laos, is forecast to initially yield 200,000 tonnes of concentrate containing on average 52,000 tonnes of copper, 47,000 ounces of gold and 400,000 ounces of silver following a $241 million capital budget, according to the company.

Pan Australian is among a small number of foreign miners seeking to tap Laos' largely unexploited natural resources, though most development plans are still on drawing boards.

Fellow Australian firm Oxiana Resources Ltd's OXR.A Sepon mine in Laos -- the country's only other operating mine -- produced 62,541 tonnes of copper last year and is targeting a lift to 80,000 tonnes by 2010.

Pan Australian also said it was preparing a revised ore estimate for the mine for April, which could increase the mine's annual production run based on richer grades of copper.

At that time, Pan Australian said it will provide fresh near-term production guidance. ($1=A$1.09) (Reporting by James Regan)