Phelan, who finished joint second behind Andy Sullivan in the Joburg Open on Sunday, carded six birdies and one bogey to finish alongside England’s Matt Ford on five under par.
Ford defied the blustery conditions to fire five birdies and no bogeys in a flawless round and finish a shot ahead of compatriots David Howell, Richard Bland and John Parry and South African Neil Schietekat and Spain’s Eduardo de la Riva.
Sullivan’s bid for a third European Tour title in South Africa in the space of nine weeks got off to a slow start, the 27-year-old having to settle for a 72 after carding five birdies and five bogeys.
Phelan made the cut in the 2013 US Open while still an amateur and won two points out of three in the Walker Cup later that year before turning professional and claiming his card at the qualifying school.
The 24-year-old could only finish 129th on the Race to Dubai last season but has made an excellent start to 2015, a closing 66 at Royal Johannesburg on Sunday giving him a share of second with four players, including former Ryder Cup star Howell.
Speaking about his 67 yesterday, Phelan said: “I was really happy with it. I played nicely and only had one bogey.
“I took advantage of the opportunities I had and any time I was close to a green I made it up and down. That’s where all the birdies came from.
“I was delighted with how I finished last week and it’s nice to carry it on to this week. Conditions were completely different to last week but it’s nice to play well.”
Ford, who was about to spend a winter working for Royal Mail before coming through November’s Qualifying School at the 10th attempt, produced the only flawless round of the day.
The world number 765 said: “I’m very happy. I had no bogeys today and I think it’s the first time this year that I’ve had no bogeys, so that will keep a couple of people at home happy.
“It was very tough. You’re trying to judge the wind and get it close.
“There were a couple of pins out there that were on the wrong side of the green for the direction of the wind.
“You couldn’t get it close and on some holes anywhere near the green was good.”
England’s Oliver Fisher, who lost in a play-off to Thomas Aiken 12 months ago, carded an opening 72 that was matched by European Ryder Cup captain Darren Clarke.