The company is working with Barminco to finalise contract terms and develop a detailed mobilisation and implementation plan.
A newer mining fleet to be supplied by Barminco is expected to deliver enhanced equipment reliability, increase operational efficiencies and drive production volumes in the medium and longer term.
Transition to contract mining
Panoramic managing director and chief executive officer Victor Rajasooriar said: “The appointment of leading underground mining services provider Barminco as preferred contractor at Savannah is the result of a rapid but comprehensive external engagement and tender process.
“We look forward to working intensively with Barminco in transitioning Savannah to contract operations and progressively lifting underground production rates in a safe and sustainable manner.”
The transition to contract mining at Savannah is expected by the end of the March quarter.
Savannah North development
First stoped ore from Savannah North remains on target for the March 2020 quarter with a progressive ramp-up of stoped ore volumes from the mine expected throughout the calendar year.
The company aims to progressively increase the proportion of ore sourced from Savannah North, relative to diminishing quantities of the mined remnant ore from Savannah ore body.
By the end of February, Panoramic expects to have opened four ore headings in Savannah North in preparation for commencement of stoping operations.
A downhole survey has also been completed on the Savannah North raise bore after zones of instability were identified and the company expects to have developed a cost-effective solution for safely completing the raise by mid-February.
Updated production guidance
Panoramic has updated the short-term production outlook for the Savannah Nickel Mine with total FY20 production now expected to be 5,200-5,600 tonnes of contained nickel, 3,400–3,700 tonnes of contained copper and 280–320 tonnes of contained cobalt.
This compares with previous guidance of 7,000–7,500 tonnes of nickel, 4,500–5,000 tonnes of copper and 400–450 tonnes of cobalt and first half FY20 actual production of around 2,380 tonnes of nickel, 1,550 tonnes of copper and 119 tonnes of cobalt.
The slight reduction is due to revised mining contract equipment mobilisation timing, forecast personnel ramp-up and further required mine scheduling changes of Savannah remnant ores.
Forecast cash flow
Panoramic is assessing the implications of the revision to FY20 production expectations, combined with finalisation of the alternative Savannah North raise bore completion solution as well as the current level of London Metal Exchange nickel prices for its forecast cash flow.
In anticipation of the need for further additional short-term funding, Panoramic is considering a range of funding options, including options that do not involve raising equity capital such as proposals from parties that have previously expressed interest in providing funding to Panoramic – such as supportive major shareholder Zeta Resources Ltd (ASX:ZER).
The company is in discussions with Macquarie Bank around the effect of the revised production forecast and associated forecast cash flows on the covenants in relation to the $20 million debt facility and anticipates that it will be necessary to seek waivers in relation to certain covenants to be calculated on January 31, 2020.