Panoramic plots move to contracting model at Savannah

Image: Panoramic Resources.

Panoramic Resources plans to transition to a predominantly contract mining model at the Savannah nickel-copper-cobalt project in Western Australia.

The company, in an operational review, has blamed a reliance on second hand equipment and the use of multiple contractors for its challenges at Savannah.

Panoramic is in communication with Tier 1 mining contractors, with the transition to contract mining at the site scheduled for next month.

The company also plans to acquire a newer mine fleet and equipment, while also developing “superior” maintenance and support services and additional operator skills and expertise.

“The operational review has evaluated several changes to the current mining operations model, which are expected to be implemented from early 2020,” Panoramic stated.

“(It) has confirmed the integrity of the overall Savannah mine design and general operating parameters.

“It has also confirmed the absence of any fatal flaws in the overall project design and operating plan.”

Panoramic has launched an entitlement offer to raise around $31 million for the repayment of a $10.5 million loan from major shareholder Zeta Resources, to set up paste fill infrastructure underground and for diamond drilling in the upper north crown of Savannah North.

The company expects a strong ramp up in contained metal production through to 2020 thanks to a transition of mining to the Savannah North deposit within the Savannah project.

Panoramic continued driving ore development in the 1381 level of Savannah North, while developing the infrastructure required in stope ore production.

It is on track to deliver first stoped ore from Savannah North in the 2020 March quarter.

Panoramic has also updated its average all-in sustaining cost (AISC) forecast over the remaining life of the mine to $US3.77 ($5.5) per pound payable nickel, which it stated was broadly similar to the feasibility study estimates in 2017.

The company has also commissioned KPMG to evaluate the fairness and reasonableness of Independence Group (IGO)’s takeover offer.

Panoramic reiterates its advice for shareholders to take no action in relation to the offer as it has the potential to significantly dilute their exposure to nickel and the company’s potential upside.

Panoramic believes that the IGO offer is opportunistically timed, but it is open to a superior offer from third parties.

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