The $41 million will be put towards a $46.55 million clean water project to help out residents of 11 Laos towns.
The Laos copper-gold miner said it would become the first private sector donor to partner with ADB for one of its sovereign projects, contributing a $6 million grant to the initiative as part of the company's ongoing sustainability activities in the country.
ADB will fully administer PanAust's grant and is providing $35 million towards the project.
The Laos government and local communities will contribute the remaining funds totalling about $5.55 million.
PanAust is already a significantly investor is Laos through its 90% stake in Phu Bia Mining.
The company has a strong track record of being recognised in sustainable development in the mining sector and has received several international awards, most recently for sustainability leadership at the 2013 Asia Mining Congress in Singapore.
With three out of 10 people in Laos not having access to clean water and with diarrhoea remaining the third leading killer of young children, PanAust said it welcomed the opportunity to help out the community where it could.
"PanAust is delighted to contribute to the achievement of the millennium development goals in Lao [People's Democratic Republic],"PanAust managing director Gary Stafford said.
"The company has been a long-term investor in Laos and this adds an important new dimension to PanAust's extensive community development initiatives."
According to ADB senior social sector specialist Anupma Jain, the project is expected to provide 160,000 people, or more than 2% of all people in the country, with clean water, improved sanitation and better health.
Under the project, households will receive free water connections when they install a toilet in their home, with sanitation grants to be provided to poor households to ensure they can fully benefit from the project.
The incentive system has worked well in other parts of Lao PDR.
The clean water project builds on the success of the three previous ADB-supported projects enhancing water and sanitation systems in 31 small towns across Laos, with 12 more systems set for completion by 2015.
Benefits stemming from the project will contribute to the government's target of achieving 90% of piped water supply and 100% sanitation coverage in urban areas by 2030.
Shares in PanAust were trading down 0.4% to $1.92.
