Restarting Savannah with the green light

PERTH (miningweekly.com) – The board of directors of ASX-listed Panoramic Resources has approved the A $ 41 million restart of the Savannah nickel project in Western Australia.

The company told shareholders on Tuesday that the decision to restart operations in Savannah, which had been placed under surveillance and maintenance in April of last year, followed a 12-month process of reviewing and implementing operational strategies to improve and reduce project risks.

The restarted operation is expected to provide 9,072 t / y of nickel, 4,683 t / y of copper and 676 t / y of cobalt in concentrate form over a 12-year life, at an average overall cost of $ 6.36 A / lb of credits payable for nickel, net copper and cobalt byproducts.

“We learned many lessons before the temporary suspension of operations in Savannah in April 2020, amid the onset of the Covid-19 pandemic. Since then, we have recapitalized the business and undertaken a series of planning and site initiatives to put the operation in a much more solid position for restart, ”said Panoramic MD and CEO Victor Rajasooriar.

“This optimization process, combined with the improved outlook for high quality nickel, copper and cobalt products from Savannah, has allowed the board of directors to approve the restart with a focus on first shipment from Wyndham Port. by the end of 2021. “

Perenti Global’s underground hard rock mining subsidiary, listed on ASX, Barminco, has received a letter of intent from Panoramic regarding development and production work on the Savannah project.

The new contract is expected to be worth some A $ 280 million over four years, with Barminco providing all development and production work for the underground mine, with mobilization expected in July this year.

Primero Group, a listed subsidiary of NRW Holdings, has also received a letter of intent for operation and maintenance work on the Savannah project, which is expected to be worth some A $ 35 million.

“By hiring a contractor for underground mining and processing in Savannah, we significantly reduce the human resource risk in a tight labor market, which turned out to be one of the main challenges faced in Savannah in 2018. and 2019, ”said Rajasooriar.

Barminco and Primero are leading entrepreneurs in their respective fields and have a reputation for providing safe and productive services. With their combined significant expertise, we anticipate that this new operating model will capitalize on the high quality nature of the Savannah resource to generate significant value for our shareholders.

“The decision to restart is expected to create 320 positions which will be largely filled by staff from contracted service providers, with Panoramic maintaining a relatively small direct workforce of around 40 people. Strict Covid-19 protocols will continue to be in place for our Kimberley staff. as required by government guidelines. “

Ore processing at Savannah is scheduled to begin in November of this year, with the first concentrate shipments scheduled for December.

Meanwhile, Panoramic told shareholders on Tuesday that to fund restart activities, the company has entered into a new five-year nickel and copper concentrate sales agreement with the Trafigura Group, starting in February 2023, s’ aligning with the expiration of the existing direct debit agreement with Jinchuan. .

Trafigura has also agreed to provide a $ 45 million secured loan financing facility which, combined with the revenue forecast, is expected to fully cover the costs of the restart. Panoramic has a current cash balance of approximately A $ 27 million and no debt.

The financing includes a five-year, $ 30 million prepayment loan facility (PLF) and a $ 15 million revolving credit facility (RCF).

The PLF has a term of five years from the withdrawal with interest repayments only required during the first 12 months. Debt repayments begin in year two and are designed to align with the project’s cash flow.

The FCR has a term of 18 months and has the option of being repayable through a final repayment of $ 15 million at the end of the term of the facility. Both facilities use the three-month Libor as the base interest rate plus a favorable interest margin.

“The new drawdown agreement and loan financing facilities with Trafigura are an essential part of the restart. The financing plan avoids any dilutive fundraising by providing what we believe to be sufficient working capital to support a smooth ramp-up, ”said Rajasooriar.

“The offtake agreement with Trafigura follows a competitive bidding process and has terms that are overall more attractive than our current contract which is due to expire in February 2023. Savannah production is now engaged until February 2028, or about half of the current 12. -year of my life.


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