Panoramic Resources has decided to reopen its Savannah nickel operation, after completing a 12-month review to de-risk and improve the project.
Panoramic Resources has decided to reopen its Savannah nickel operation, after completing a 12-month review to de-risk and improve the project.
The company closed the Kimberley project in April 2020 due to operational uncertainties, including increased transportation costs and availability of supplies, equipment and personnel.
In a statement to the ASX this morning, it said it decided to restart the operation following a year-long assessment process to reduce the operating and financial risk and improve profitability of the project.
It estimated the site had a 12-year mine life with an average annual production target of 9,072t nickel, 4,682t copper and 676t cobalt in concentrate.
Panoramic Resources managing director Victor Rajasooriar said it was great to be reopening the mine as the battery thematic continued to grow.
He said company had learnt many lessons in the lead up to the suspension of operations at Savannah.
“Since that time, we have recapitalised the business and undertaken a range of planning and site-based initiatives to put the operation in a much stronger position for restart,” Mr Rajasooriar said.
“This process of optimisation combined with the improved outlook for Savannah’s high-quality nickel, copper and cobalt products, has given the Board confidence in approving the restart with a target of first shipment from Wyndham Port by the end of 2021.”
Panoramic has kept its core staff numbers low and signed a letter of intent for a four-year contract for underground mining work with Barminco and a non-binding letter of intent for a three-year mineral processing contract with Primero.
“By engaging a contractor for both the underground mining and processing at Savannah, we are significantly reducing the human resourcing risk in a tightened labour market, which proved to be one of the key challenges encountered at Savannah during 2018 and 2019,” Mr Rajasooriar said.
“Barminco and Primero are leading contractors in their respective fields and have a reputation for delivering safe and productive services.
“Through their significant combined expertise, we expect that this new operating model will capitalise on the high- quality nature of the Savannah resource to generate significant value for our shareholders.”
Mr Rajasooriar said the project was expected to create 320 positions that would largely be filled on contracted and service provider workforce, with Panoramic maintaining around 40 employees.
The project will be supported by a five-year nickel and copper concentrate offtake agreement from 2023 to 2028 with Trafigura Group, which conincides with the end of the existing offtake agreement with Jinchuan.
Trafigura will also provide a US$45 million secured loan financing facility which is expected to cover the costs of the restart.
“The financing package avoids any dilutive equity raising by providing what we expect to be sufficient working capital to support a smooth ramp-up,” Mr Rajasooriar said.
“The offtake agreement with Trafigura follows a competitive tender process and has terms which overall are more attractive than our current contract which is scheduled to expire in February 2023.”
Underground mining is planned to start in August 2021 and ore processing is expected to begin in November 2021.
Shares in Panoramic Resources were up 11 per cent to 15 cents each at 12pm AWST.
