Panoramic Resources completes fourth nickel shipment: Eyes on mine life and metal prices

Panoramic Resources (ASX: PAN) has shipped its fourth nickel-copper-cobalt concentrate product from its Savannah Nickel Project, having only started production last July. 

Fourth shipment

The fourth shipment contained 10,489t of nickel-copper-cobalt concentrate, with a provisional invoice submitted for US$18.1m (A$25.1m). Payment is expected in the next week. 

“As an unhedged producer we participate fully in commodity price moves and the pricing received on the fourth shipment is one of the best we’ve had since production resumed,” said CEO, Victor Rajasooriar. 

Panoramic said that following the fourth shipment, port concentrate stocks have been fully depleted, with 726t of stocks remaining at the mine site.

A fifth shipment has been planned for early July. 

Previous shipments

• First shipment (30 December 2021)

  • 10,865t for US$14.8m 

• Second shipment (17 February 2022)

  • 9,409t for US$14.6m 

• Third shipment (4 April 2022)

  • 10,347t for US$21.8m

Key considerations for Panoramic

Panoramic shares trended strongly for almost 18 months, rallying from around 10 cents in September 2020 to highs of 38 cents in April this year. Only recently has momentum come to a halt due to factors including broader-market volatility, economic growth concerns and stabilising nickel prices. 

Panoramic share price chart

From a production standpoint, the Savannah Project has been processing metals at 70% capacity (55,000 tpa) as operations ramp up.

The company has an offtake agreement secured until February 2028.

Beyond production, Panoramic intends to explore the "significant inferred resource" that sits adjacent to current ore reserves. Priority areas that will be explored to extend mine life includes:

• Savannah North

  • Upper Zone up plunge to the east in H2 FY22

  • Upper Zone down plunge to the north-west in H2 FY22

  • Lower Zone down plunge to the north in FY23

Nickel outlook

Nickel has arguably been one of the most volatile battery metals, albeit for the wrong reasons.

The metal was up around 25% year-to-date in early March to US$25,000/t. But a short squeeze drove prices as high as US$100,000 before the London Metal Exchange temporarily halted nickel trading.

Prices have since stabilised around US$30,000.

Nickel futures (Source: TradingEconomics)

“But given that its fundamentals have started to look softer than we previously envisaged, we would not be surprised if nickel starts to trade lower," said Fastmarkets principal metals and mining analyst, Andrew Cole.

Its worth noting that Panoramic management described the company as an "unhedged producer", which could see some volatility in future earnings, especially if nickel prices start to trade lower.