Panoramic Resources (ASX: PAN) is a Western Australian nickel sulphide producer operating three mines. The company has two underground mines: the Savannah Project in the Kimberley and the Lanfranchi Project south of Kambalda, along with the Copernicus Project open pit mine near Savannah.
Panoramic Resources (ASX:PAN) has advised that it has agreed to purchase the 25% holding in the Lanfranchi Project held by its Canadian based, TSXV listed joint venture partner Brilliant Mining Corp.
(TSXV:BMC)), bringing Panoramic’s ownership of the Lanfranchi Project to 100%.
Panoramic will, as a result become, one of Australia’s major nickel sulphide miners, increasing in-ground nickel resources to over 200,000t Ni contained .
Managing Director, Peter Harold, said, “This is a wonderful outcome for both Panoramic and Brilliant Shareholders. By moving to 100% ownership of the Lanfranchi Project, Panoramic receives an instant increase in resources, reserves and production, as well as simplifying administration and management of the Lanfranchi Project. We believe this transaction is also beneficial to Brilliant shareholders who become shareholders in Panoramic, effectively maintaining an interest in Lanfranchi while gaining exposure to our Savannah Project. In our view this is a “win-win” for both parties.”
Details of Proposed Purchase
Panoramic will acquire Brilliant’s wholly owned Australian subsidiary, Donegal Resources Pty Ltd (“Donegal”), which owns a 25% interest in the Lanfranchi Project. Details of the transaction are as follows:
- Consideration - 12 million fully paid ordinary shares in Panoramic (escrowed for six months from the date of issue) and 3 million unlisted, non-transferable options over Panoramic shares (exercise price $1.50, expiry 31 December 2012);
- Effective Date – 1 November 2008;
- Major Conditions Precedent – Completion of Panoramic financial due diligence on Donegal, and Brilliant shareholder approval.
Rationale for acquisition
The consolidation of the Lanfranchi Project represents an important strategic and complimentary acquisition for Panoramic and falls within the company's nickel growth strategy.
Panoramic announced on 14 January 2009 a 13% increase in the Deacon Resource to 71,800t Ni contained. Mine planning studies to convert this Resource to Ore Reserve status are expected to be completed during the March 2009 quarter. Previous Resource to Reserve conversions at Deacon have achieved conversion rates of 95% on a contained nickel basis. The new ventilation system for Deacon is currently being commissioned, allowing ore production at Deacon to ramp up to above 30,000t per month.
Based on the current production schedule, the Lanfranchi Project has a mine life of at least six years. However, given the significant underlying resource, the continuing exploration success, and the prospectivity of the tenements, Panoramic is confident, subject to the nickel price, that the Lanfranchi Project will be in operation for at least the next 10 years.
The production forecast for Panoramic’s combined operations (Lanfranchi & Savannah) for 2008/09 is expected to be in the range of 18,000 -19,000t Ni contained plus copper and cobalt credits (100% project basis), which represents a 20-30% increase on FY2007/08. With the consolidation of the Lanfranchi Project ownership (subject to Brilliant shareholder approval and based on the effective date of 1 November 2008), Panoramic’s equity share of forecast production for 2008/09 is now expected to be in the range of 17,000-18,000t Ni contained.
Liquid Assets: A$80 million (31 Dec 2008)
Hedge Book: A$74 million “in-the-money”
Enterprise Value: A$5 million for two operating Ni mines
Long term debt: Zero
Short term debt: $6 million (finance leases)
Net Profit: A$9.0M
Dividend: 1 cent (fully franked)
Cash & receivables: A$80M
Metal production: 9,285t Ni, 2,445t Cu, 206t Co