Panoramic Resources is well placed to ride out the current nickel price environment. While the company is conserving its cash, it has been actively growing its resource base to ensure the Savannah project can restart on a lower cost base, and with a long mine life. Following a recent major resource upgrade, resources at Savannah are now three-and-a-half times greater than they were when the company commenced mining in 2003. The decision by the board to place both the Savannah and Lanfranchi operations onto care and maintenance due to the 10-year low nickel price was a difficult but prudent one. “We expect the nickel price to trade higher in the medium term as the market moves back into deficit after more than four years of surpluses. The recent 25% rally in the nickel price appears to have been the result of short coverings of future positions, brought on by the crackdown by the Philippines government on poor operating practices by some of the country’s laterite miners, and the closure of some mines,” said Managing Director Peter Harold.
“Even at the current price of around US$4.50 per pound, we understand that approximately 40% of the world’s nickel production is losing money on a full-cost basis. The price will have to rise in the future if production is to be maintained at the current rates.” Panoramic’s efforts are now focused on mine planning and scheduling, which will allow for a quick restart of the operations when prices return to levels that ensure both locations can make an acceptable margin. In addition, the company is proceeding with the divestment of the Gum Creek Gold asset by way of an initial public offering (IPO). The proposed structure of the IPO is for the company to vend Gum Creek for a consideration of $15 million. Panoramic will acquire 50% of the new company, and that company will raise an equivalent amount. The new funds will be used to fast-track exploration activities primarily on the exciting new induced polarization (IP) targets along the Wilsons Shear, and continue feasibility studies on the oxide and refractory ore bodies at Gum Creek. A scoping study conducted in March 2016 demonstrated that Gum Creek could produce approximately 60,000 ounces of gold per year for at least five years from various oxide ore bodies. A significant amount of refractory material and preliminary testwork also established that a low-temperature pressure leach of a gold concentrate could be an attractive option to maximise value from the refractory ore. Further testwork and studies will be carried out, utilising funds from the IPO. The company is also the 100% owner of two platinum and palladium projects – Panton, located 60 kilometres from the Savannah project, and Thunder Bay North, located in Ontario, Canada. Panton hosts two million ounces contained platinum and palladium in resource. Recent positive testwork undertaken by the company suggests improved metallurgical recoveries and concentrate grade, as well as the potential for ore sorting prior to concentrating. In Canada, Rio Tinto has the right to earn up to 70% interest in the Thunder Bay North project by spending up to C$20 million over five-and-a-half years. Rio Tinto has been drilling at Thunder Bay since 2015. Along with its skills and expertise, Rio Tinto’s interest in the project provides a strong vote of confidence for its future. Following the recent resource upgrade, combined resources at Savannah now total 226,400 tonnes of nickel, 104,700 tonnes of copper and 15,300 tonnes of cobalt. Cobalt has been gaining considerable market interest in recent months, with concerns growing that the boom in lithium-ion batteries – of which cobalt is a vital component – could see a severe shortfall in cobalt supply. The Savannah project hosts a major nickel sulphide system when compared to other Australian nickel sulphide resources. “By the time mining was put on hold at Savannah in May 2016, the mine had produced more than 1.2 million tonnes of concentrate containing 94,000 tonnes of nickel, 53,000 tonnes of copper and around 5,000 tonnes of cobalt,” said Mr Harold. “That’s an invoiced value of $US1.5 billion over 12 years – not bad for a project that initially had only a five-year mine life.” The company has also been looking at how it can produce a higher grade nickel bulk concentrate from Savannah, or separate nickel and copper concentrates. Panoramic has also undertaken a preliminary study on producing a high-grade nickel/copper/cobalt matte using the IsaSmelt Mini Smelter technology. “It is important that, when we restart, we produce a higher quality product that is more attractive to nickel smelters and/or refineries. The testwork and market research we are undertaking will enable us to determine the most suitable product to produce going forward,” said Mr Harold.