PERTH (miningweekly.com) – Nickel miner Panoramic Resources has lowered its 2020 production guidance from its Savannah operation, in Western Australia.
The ASX-listed company is now expecting full-year production to reach between 5 200 t and 5 600 t of contained nickel, between 3 400 t and 3 700 t of contained copper, and between 280 t and 320 t of contained cobalt.
This compared with the previous guidance of between 7 000 t and 7 500 t of contained nickel, between 4 500 t and 5 000 t of contained copper, and between 400 t and 450 t of contained cobalt.
Panoramic said that the decrease in production expectations was driven by lower production volumes in the second half of the financial year, driven by revised mining contract equipment mobilization timing and forecast personnel ramp-up, as well as further revised scheduling for mining activities at the Savannah remnant ores.
Meanwhile, first stoped ore from the Savannah North operation remains on target for the March quarter of 2020, with the progressive ramp-up of stoped ore volumes to flow through the 2020 calendar year.
The miner told shareholders that it was assessing the implications of the revision to the 2020 production guidance, combined with the finalization of the alternative Savannah North raise bore completion solution and the current level of LME nickel prices, to forecast its cash flow.
Panoramic is considering a range of funding options, including those that would not involve an equity capital raise, in anticipation of a need for additional short-term funding.
The funding options being considered include proposals from parties that have previously expressed interest in providing funding to Panoramic, including shareholder Zeta Resources, with the miner noting that change-of-control transaction discussions were also continuing.
Furthermore, the miner is in discussions with Macquarie Bank about the effect of the revised production forecast and the resultant forecast in cash flows on the covenants in relation to the existing A$20-million debt facility, with Panoramic anticipating that it would be necessary to seek waivers in relation to certain covenants to be calculated on the end of January.
In addition to the downgrade of production expectations, Panoramic on Thursday also announced that mining contractor Barminco had been appointed as the preferred underground contractor at the Savannah project.
The nickel miner has signed a letter of intent with Barminco and is working to finalise a contract terms, allowing for mobilization and the transition to contract mining at Savannah by the end of the March quarter.
The contract is worth an estimated A$200-million, with Barminco to provide mine development, production and haulage over a three-year term. Barminco is expected to employ some 170 staff at the project area, and will use predominantly new equipment.