PERTH (miningweekly.com) – The share price of nickel miner Panoramic Resources tumbled by more than 30% on Wednesday, after the company announced that its Savannah operation, in Western Australia, would be placed on care and maintenance.

Panoramic blamed the continued decline in the US nickel price and the uncertain outlook for the price over the foreseeable future. Panoramic said the price outlook had necessitated a review of its activities at both the Savannah operation and the Perth head office.

Following the review, the Panoramic board believed that it was in the best interest of shareholders to place the Savannah operation onto care and maintenance over the coming months, in the hopes of preserving the remaining resource.

It was envisaged that the operation could restart when nickel prices returned to a more sustainable level, where the mining of the Savannah orebody, most likely in conjunction with the development of the Savannah North project, would provide an “acceptable” return.

As a result of the decision to suspend operations at Savannah, about 50 employees would be made redundant at the mine over the coming months.

Meanwhile, Panoramic had reported that a scoping study at the Savannah North project demonstrated that it could be developed into a long-life, medium-cost operation, producing an average of 9 500 t of nickel, 5 300 t of copper and 700 t of cobalt in concentrate a year.

The project was expected to have a mine life of nearly eight years, and would require a capital investment of A$42-million.

At a nickel price of $5/lb, the project was expected to have a net present value of A$6-million, increasing to A$232-million at a nickel price of $8/lb, while the projected internal rate of return would vary between 14% and 118%.

Forecast average C1 cash costs for the operation were estimated at A$3.14/lb.

As part of the scoping study, Panoramic identified a number of enhancement opportunities, which could add significant project value, including future resource growth, an optimised mine plan, increased production rates and the amenability of the project to produce alternative products.

Panoramic said it now planned to complete the feasibility study for the Savannah North project, and to undertake additional exploration work to further test the strike length of the deposit, and to potentially grow the resource base.

If the decision to develop Savannah North was made, it would most likely be made in conjunction with the restart of mining and processing at the Savannah mine.

Free cash flow from Savannah was expected to finance all or part of the capital expenditure at Savannah North.

Panoramic shares were trading at a low of 8c on Wednesday, down from a high of 12.5c. The stock closed at 12c a share on Tuesday.