Market abuzz with talk of looming Panoramic Resources raise

Base metal mining and exploration company Panoramic Resources could be poised to tap the market. Picture: iStock

Speculation is mounting that the base metal mining and exploration company Panoramic Resources could be poised to tap the market.

DataRoom understands that broker Canaccord has been sounding out prospective investors for the raise on behalf of the Perth-based group.

The understanding is that the company is pressing up against a debt deadline with lender Trafigura as it faces operational issues with its Savannah Nickel Project in Western Australia.

Some believe that the group could be in search of about $40m.

IGO has 21 per cent of the company, after inheriting the stake through its acquisition of Western Areas.

This month, Panoramic Resources told the market that nickel-copper-cobalt concentrate production had resumed as normal from Savannah as a filter press was successfully repaired and recommissioned after the fabrication and installation of a new filter press head unit.

This was after cracks occurred in the filter press head unit last month and required a replacement.

The company told the market that it had $US45m of debt drawn with Trafigura Group in a $US30m tranche due 2026, based on scheduled minimum monthly payments, and another $US15m tranche that was extended until December this year.

It also has $22m of cash.

In May, its market value was $349m, but it has since fallen to $185m.

The group raised $90m at 7c a share in 2020, and at the time Western Areas took a 19.9 per cent strategic stake in the business after weighing a buyout proposal for Panoramic.

IGO purchased Western Areas in a $1.25bn buyout last year.

Panoramic’s shares closed at 9.2c.

In 2020, Panoramic raised to repay creditors including Barminco, Macquarie Group and its shareholder Zeta Resources, backed by well-known investor Duncan Saville.

Before the offer, Zeta had 35.2 per cent and it now has 13.1 per cent.

The company was subject to a $312m or 47.6c per share takeover bid by IGO, which has recently been dealing with troubles of its own, namely a write down of up to $980m on its of Western Areas acquisition on the reassessment of operating and capital costs of the two nickel projects in Western Australia, Cosmos and Forrestania.

Panoramic at the time was advised by Azure Capital, while IGO worked with Citi.

But IGO let its takeover bid for Panoramic lapse in December 2019 and walked away.

Panoramic’s Savannah nickel sulphide mine in WA’s Kimberley region had struggled to return to production in the years that followed its 2016 closure.

It’s a tough time to be going cap in hand to investors if you are a nickel miner, with scepticism among some investors following the IGO write down and with Poseidon shelving development plans.

But the attraction for suitors in the past is that Panoramic offers exposure to the materials used for electric vehicles, which are anticipated to be the transportation mode of the future, with its Savannah Project in Western Australia that mines nickel and cobalt, both used to make batteries.

And it is the only pure play Australian independent nickel producer.