Sustainability

Oxfam Cambodia, May 2016

Adrian Bell

PanAust General Manager Human Resources & Risk Management

About PanAust

• PanAust is a leading copper and gold producer

in Laos with pre-development and exploration

opportunities in Laos, Papua New Guinea,

Myanmar and Chile: corporate headquarters in

Brisbane, Australia

• 2015 was a pivotal year for PanAust; moved

to ownership by Chinese state-owned

enterprise, GRAM; de-listed from the ASX

• The combination of operational excellence and

total commitment to sustainability’ is the

foundation of our success

Operations and projects Laos/PNG

• PanAust’s producing assets are the:

– Phu Kham Copper-Gold Operation

– Ban Houayxai Gold-Silver Operation

• Both are located in the Company’s 2,600

square kilometre Phu Bia Contract Area

in Laos

• PanAust owns an 80 per cent interest in

the Frieda River Copper-Gold Project in

Papua New Guinea with the remaining

20 held by Higlands Pacific

Frieda River

Brisbane Office

Phu Kham

Ban Houayxai

Committed to sustainable development

Underpins PanAust’s growth strategy

Is essential for ongoing success

The effective management of

sustainability risks makes good

business sense

This video highlights PanAust’s

commitment to sustainable

development

GovernanceSocial PerformanceEnvironment

Health and Safety People Performance

Our Values

Leveraging culture

through sustainability

EY M&M sector top-ten risks 7 year comparison

Rank 2008 2011 2012 2013 2014

1 Skills shortageResource

Nationalism

Resource

NationalismCapital management

Productivity

Improvements

2Industry

consolidationSkills shortage Skills shortage Margins / productivity

Capital Dilemmas –

allocation and access

3 Infrastructure access Infrastructure access Infrastructure accessResource

Nationalism

Social License to

Operate

4Maintain Social

License to Operate

Maintain Social

License to OperateCost inflation

Social License to

Operate

Resource

Nationalism

5Climate change

concernsProject execution Project execution Skills shortage Capital Projects

6 Cost inflation Market volatilityMaintain Social

Licence to OperateMarket volatility

Price and Currency

Volatility

7 Pipeline shrinkage Capital management Market volatility Project execution Infrastructure Access

8Resource

NationalismCost inflation Capital management Sharing benefits Sharing benefits

9 Energy security Supply interruptions Sharing benefits Infrastructure accessBalancing talent

needs

10 Increased regulation Fraud & corruption Fraud & corruption Threat of substitutesAccess to water and

energy

Sustainability Report

• Second mining Company to achieve new

Global Reporting Initiative (GRI) G4,

reporting framework

• Report to an A+ Application Level

• External verification (Beca Consulting)

prior to publication

• Focuses on the issues that are material

to our business

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Materiality determination process

6

Current Group risks

Risk

No.Risk Owner Risk Description

Risk

Score

Risk

Goal

Committee

Oversight

1EGM Project

Development

Failure to deliver Board approved development

projects within design, budget and schedule.H M Board

2 Chief Financial Officer

Financing risks associated with a breach in

parameters that the Board has endorsed

(through the capital management plan).

H M Board

3General Manager HR

and Risk ManagementAbility to attract and retain people. H M Sustainability

4 EGM PanAust AsiaSignificant safety, environment, or social

incident affecting the corporate reputation.H M Sustainability

5 EGM PanAust Asia Business Interruption. M M Board

6 Managing Director Loss of MD with EGM's or MD/CFO M M Board

7 Managing DirectorProduction Gap - PBM Closure and Frieda

Start-up. H L Board

Governance

• Signatories to Minerals Council of Australia’s

Enduring Value framework

• Signatory to the Voluntary Principles on Security

and Human Rights

• The GM, HR and Risk oversees the integration

of sustainability and group targets

• Enterprise Risk Management - risk and

opportunity management integrated into all

business processes, at all levels, through a set

of common tools (risk register)

• Sustainability Standards

• Auditing and Benchmarking (IFC Audit, Socio-

Economic and Health Surveys, Beca Assurance

GRI, ISO 18001 & 14001, E3 etc.)

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Community development

• PanAust’s community development program

aims to make meaningful contributions to

building long-term community capacity thereby

empowering people to determine and progress

their own development priorities beyond the life

of the Company’s mines

• Throughout 2015, small community businesses

collectively generated over US$1 million of

revenue for local families producing

consumables such as vegetables, drinking water,

eggs, cloth bags, fruit and fish

Community Development Fund

• In 2015, Community Development Funds in Laos

comprised 41 small-scale projects across rural

communities directly and indirectly affected by

PanAust’s activities

• Focus areas were education, healthcare,

agriculture, infrastructure, small business

development

• Since 2008, PanAust has invested more than

US$3.8 million in host communities through the

CDF programs

• Community development programs were also

extended to Papua New Guinea throughout the

year and were commensurate with our level of

activity at the Frieda River Project

Tailings and waste rock management

• Management of Acid Rock Drainage at Phu

Kham is a key issue

• Tailings Storage Facility (TSF):

– Evaluated as industry best-practice

– Integrated waste facility

– Waste is classified based on its acid rock

drainage potential

– Uses a simple ‘traffic-light’ management

plan – red, amber, green and blue

– High Potential Acid Forming (PAF) mineral

and disposed of underwater in TSF

– Fleet management system is used to strictly

manage quality control of sulphur grades

Tailings and waste rock monitoring

• Positive water balance

• During operations, approximately 95% of water

is sourced as recycled water from the TSF for

use in processing.at Phu Kham

• Excess water is discharged to the Nam Mo River

• Extensive monitoring is carried out within the

embankment, water body, point of discharge and

downstream of the receiving environment

• Multi-disciplinary team of internal and external

specialists oversees performance and

management

• At closure, all higher risk PAF to be placed under

a permanent water cover

Ban Houayxai cyanide management

What is the Cyanide Code?

– Administered by the International Cyanide

Management Institute (ICMI)

– Internationally recognised management

system

– A voluntary program

– 9 principles, 200 standards of practice

• Cyanide can be emotive issue

• PanAust signatory to the Code – we view the

code as the minimum to ensure the business,

environment and community are not put at risk

• All areas at Ban Houayxai where cyanide is

used or may be present are designed,

constructed and operated to Code

requirements or better

• Recertification in 2016

Safety performance

2013-2015 PanAust Group ReportableIncidents (Controlled Work Sites)

2013 2014 2015

Fatal injuries 0 2 0

TRIFR 1.72 0.88 0.62

DART

Frequency

0.37 0.22 0.16

LTIFR 0.31 0.15 0.16

• Safety performance continues to be better than

industry averages

• Low industry rates alone will not prevent future

significant incidents

• Contractor management most significant risk

• Identified and analysed trends and hot spot areas

• Lead indicator program has a strong focus on hot

spot areas

• Developed Significant Incident Senior

Management Taskforce

• Development of Visible Safety Leadership

Program (deep dives)

• Significant reduction in cardinal rules breaches

and vehicle incidents

Visible safety leadership

• Group Visible Safety Leadership Guideline

rolled out in 2015

• Set of expectations on types and duration

of leadership activities to be undertaken by

management everyday

• In 2015 there was a focus on Visible Safety

Leadership through lead indicator programs

that addressed safety hotspots and

implementing the deep dive review

program

• Deep dives are vertical layered reviews

lead by general managers; proactive

reviews focused on high-risk tasks and

areas of concern for senior management

Attraction and retention

• Five-year strategic plan

• PanAust’s people are skilled and motivated,

with good leadership and systems that provide

support for a high-performance resources

company and with people who are valued by

the company and rewarded for success

• Ensure Phu Kham is flagship – that it operates

to world-class standards-template for other

projects as the company grows

• No silver bullet – many different components

• Overarching – this is our Vision & Values

reinforced by the PanAust Way

What is “localisation”?

What?

• Common term in global mining – sometimes referred to as ‘nationalisation’

• Gradual replacement of expatriates with national staff

Why?

• Social licence to operate

• Skills development and capacity building

• Lower cost

• Lasting legacy for Lao PDR

It’s simply the right thing to do

…against the odds

• Immature mining industry

• Low education levels

• Lack of tertiary qualifications in some

key mining disciplines

• Language barrier

• Different perspective on risk and safety

• Cross-cultural challenges

• Growing economy and market =

increased competition for talent

Success…

• During 2015, our workforce in Laos for

the first time reached more than 90 per

cent localisation

• Many replacing – or being readied to

transition into – roles held by expatriate

employees.

• Diversity Committee (measurable

objectives) 20% women, Indigenous

Testing – Q Test

How have we done it?

Technical and Language Training

Graduate Program

Workforce/Localisation

Planning

Succession Planning

Mentoring Program

Recruitment & Selection

Leadership Development

Organisation Structure

Summary

• PanAust is a successful and competitive copper and gold producer with strong

cash flow to support growth initiatives

• We maintain a strong focus on sustainable outcomes for the communities within

which we operate

• Recognised as a leader in sustainability performance

• Use Enterprise Risk Management framework to identify opportunities for continual

improvement

• Well-established sustainability framework to be applied in other countries in the

future

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Success is shaping our future