A 'major de-risking event' for Panoramic Resources

Panoramic Resources (ASX: PAN) successfully made its first shipment of nickel-copper-cobalt concentrate from its Savannah Nickel Project. 

A total of 10,865t of nickel-copper-cobalt concentrate was loaded on 26 December for delivery to Panoramic’s offtake partner, Jinchuan. A provisional invoice of US$14.8m has been submitted with payment expected in the first week of January. 

Commenting on the milestone, Managing Director and CEO, Victor Rajasooriar said: 

“It is pleasing to see the final piece of the puzzle coming together to bring the revenue stream into the operations. With nickel, copper and cobalt prices strengthening, and forecast to remain buoyant into 2022, we look forward to more successful shipments in 2022.”

A return to production 

Panoramic successfully commenced mining operations at its Savannah Nickel Project in April this year, bringing the asset back into production at an opportune time. 

Nickel and cobalt prices have surged to multi-year highs. While the copper narrative remains encouraging from both the supply and demand side perspective.     

Over the duration of Savannah’s 12-year mine life, the company is targeting annual production of 9,072t of nickel, 4,683t of copper and 676t of cobalt. 

Panoramic estimates that each 1,000t shipped represents approximately $2m in revenue. 

Exploration upside 

Panoramic has identified ‘a significant inferred resource’ adjacent to its current ore reserve and in close proximity to its planned underground operations. 

Panoramic has set aside $4m towards exploration programs in FY22, with drilling activities expected to commence at priority areas at Savannah in the second half of FY22. 

Drill results to date have confirmed a ‘strong and continuous nature of the Savannah North mineralisation’. 

A stubborn share price 

Panoramic shares trade around the 20 cent level, despite boasting a market capitalisation of $500m.

The stock moves in 0.5 cent increments, meaning every tick up or down represents roughly a 2% change in share price.

Investors will often observe with these 20 cents stocks that there are millions of shares on both the bid and sell sides, making it difficult for the share price to find headway.

To counteract this issue, emerging uranium producer Boss Energy (ASX: BOE) opted for an 8:1 consolidation last month.

A more familiar example was Lynas Rare Earths (ASX: LYC) which consolidated 10:1 in late 2017.

Broker views 

Macquarie is one of few brokers to have covered Panoramic in recent months. 

A 30 cent share price target was given in addition to an outperform rating. 

Macquarie viewed Panoramic's first concentrate shipment as a major de-risking event.