Panoramic undermines IGO takeover talks amid Savannah troubles

Panoramic Resources has conceded that its production guidance at the Savannah project in Western Australia will not be met in the 2020 financial year.

The company has been plagued by the poor performance of its underground paste filling system, lower nickel grades and continuing equipment availability issues through to October.

Panoramic’s concession adds to the below-budget performance during the September quarter at Savannah.

Despite initiatives to improve mining rates, Panoramic expects its short-term performance to remain below previous forecasts, particularly during the next four months.

This trend will also continue into the June 2020 quarter as Panoramic transitions away from mining the Savannah remnant orebody and moves to the Savannah North orebody.

Panoramic recently-elected managing director Victor Rajasooriar has launched an operational review of Savannah, aimed at stabilising and improving the project’s short-term performance.

The company expects to release the outcome of this work in the next few weeks.

Panoramic will commence mining of development ore at Savannah North this month, with stoping ore to be produced from the March 2020 quarter.

The Savannah North raise bore is also on track for completion in the June 2020 quarter.

Panoramic has flagged the need to raise additional funds in the form of an entitlement offer of ordinary shares.

Changes in project financing, along with Panoramic’s potential failure to meet production guidance, will likely breach the conditions set out by Independence Group (IGO) in its takeover offer, if they haven’t already, according to the target company.

“As previously advised, it is open to IGO to rely on any breach of these conditions to terminate its offer, or to waive any breach,” Panoramic stated.

“Our expectation is that IGO will inform the market as to its intentions in relation to the offer. Shareholders continue to be advised to take no action in relation to the offer or any document received from IGO.”

IGO is reviewing its options concerning its takeover offer, but insists the Panoramic board to provide the company with due diligence access.

This will allow IGO to decide whether to proceed with its offer despite the breach, or likely breach, of the offer conditions, according to IGO.

“The due diligence conditions of the offer were included to protect the interests of IGO shareholders and, in the context of (yesterday’s) announcement by Panoramic detailing the ongoing operational issues at Savannah and deteriorating financial position of Panoramic, those conditions were clearly justified,” IGO stated.

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