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Mining would start on the existing reserves, with development over to the Savannah North deposit being undertaken at the same time – with production from Savannah North at full speed 15 months later.
The company isn’t saying when it will kick the new operation back into life, only that it is “ready to recommence operations as soon as the US dollar nickel price returns to more sustainable levels”.
Panoramic quoted an RBC report last month on the nickel market forecasting an average nickel price of $US5/lb in 2017, $6.00/lb in 2018, $7.00/lb in 2019, and $10.00/lb in 2020 – and a long-term price of $8.00/lb.
Panoramic said that an assumed US/Australian dollar exchange rate of 0.736, the nickel price required to achieve cash break-even is $4.40/lb, and for NPV break-even is $4.50/lb.
“An AISC margin of 20% is achieved at $5.50/lb,” Panoramic said.
The current nickel price is circa $4.60/lb, though supply uncertainty out of Indonesia and Philippines has been further clouding an already unclear market picture.
Savannah’s cash costs are put at $2/lb, while its operation costs are estimated at $3.30/lb and AISC $4.40/lb.
In broader terms, the Savannah project could consume a total of $A234 million in costs and capital over a 10-year life while generating nearly $1.5 billion in revenue.
Earnings (on an EBIDTA basis) are put at about $50 million per annum.
Panoramic currently has about $15 million cash.
Shares in Panoramic were up nearly 4% to 28c in late trade, capitalising the company at $120 million.
