Panoramic Resources prepares for next chapter of nickel growth in WA

Panoramic Resources ASX PAN nickel Savannah
Panoramic is aiming to commence concentrate shipment from its Savannah project in Q1 2019.

Resources company Panoramic Resources (ASX: PAN) is on track to restart production at its flagship Savannah nickel-copper-cobalt project in the east Kimberley region of Western Australia.

Panoramic operated for twelve years between 2004 and 2016, producing over 180,000 tonnes of nickel, 60,500t copper and 4,900t cobalt from its Savannah and Lanfranchi nickel sulphide projects.

Highly volatile nickel prices put pressure on all nickel miners back in 2015, but a renewed surge in demand has enticed smaller miners such as Panoramic back into operation.

The past six months have seen a flurry of activity for Panoramic, including both the rapid re-development of its Savannah project following renewed demand for nickel from China, but also, the sale of its other prime mining asset (LaFranchi) to Black Mountain Metals for $15 million, as part of an optimisation of its exploration and mining activities.

According to Panoramic’s managing director Peter Harold, despite being a “great revenue contributor” since 2005, Lanfranchi has been “displaced by the much larger and higher margin Savannah project, that would serve as the company’s next chapter of growth.”

“We believe Savannah is a Tier-1 base metals asset, offering robust operating margins and a long mine life, as well as considerable exploration upside still to be fully evaluated. We are very excited about the restart of operations at Savannah and expect the project to deliver robust returns from its nickel, copper and cobalt production over the initial mine life of eight-plus years,” said Mr Harold.

He added that “with the Savannah Project development fully funded, the sale proceeds from Lanfranchi will strengthen our balance sheet, placing the company on a sound footing as we ramp up to full production from the new Savannah North orebody as well as providing flexibility to fund regional exploration activities and other growth initiatives.”

Assessing Savannah

At Savannah, Panoramic has confirmed it has access to approximately 313,600t nickel, 99,100t copper and 14,900t cobalt.

An optimised feasibility study on the project has confirmed an eight year mine life with excellent potential for extension through exploration success. The study also estimated a low restart cost and short lead time to production.

The WA-miner said its Savannah nickel project contains a significant Australian sulphide orebody which explains the haste to restart the operation, with the company’s first concentrate shipment to China already pencilled in for the first quarter of 2019.

Doubling down on Savannah

Panoramic says its vision is to broaden its exploration and production base, with the aim of becoming a major, diversified mining company on the S&P/ASX 100 Index.

To achieve its ambitions, the company says its growth path will include developing existing resources, discovering new ore bodies and “acquiring additional projects”; although, the soon-to-be nickel producer has not revealed any firm targets or specific areas of interest just yet.

For the time being, Panoramic’s focus is on readying Savannah for production over the next three months.

“With the decision to restart made on 16 July 2018, following the signing of a new four-year offtake agreement with Sino Nickel (the Jinchuan/Sino Mining JV) and securing the $40 million project financing facility with Macquarie Bank, activities have increased significantly on site,” said Mr Harold.

Savannah’s first hurrah

Panoramic successfully commissioned the Savannah project in late 2004 and within 10 years was able to produce a record 22,256t of contained nickel in 2014, followed by a further 19,301t in 2015.

However, due to the downturn in the global metal markets, the company was forced to place both its viable projects on care and maintenance in November 2015 and May 2016 pending a sustained recovery in the nickel price.

Nickel price chart Panoramic Resources
Historical nickel price.

Since May 2016, nickel prices have swelled from around US$8,000/t to as high as US$16,000/t in July this year, with the nickel price now trading around US$12,000/t, according to figures from the London Metal Exchange (LME).

Preparing for imminent production

To prepare Savannah for production, Panoramic is looking to complete a series of tasks relating to onsite plant refurbishment such as installing new pumps, completing crusher works, carrying out repairs where necessary, refurbishing the filter press and drilling a pilot hole which began last month.

At the current rate of progress, it is planned that recommissioning of the processing plant will commence in October 2018.

Regarding its intended mining activity, Panoramic said its underground mine is in “excellent condition” having been looked after by the site’s care and maintenance crew for the past three years.

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