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Panoramic suffers severe loss amid plummeting nickel price

30th August 2016

By: Samantha Herbst

Creamer Media Deputy Editor

  

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JOHANNESBURG (miningweekly.com) – Nickel-focused Panoramic Resources’ 2016 financial year results have been severely impacted by the falling nickel price, which reached a decade low in February, pushing the company into an after-tax loss of A$144.4-million, against a loss of A$28.8-million reported in the previous year.

Further, the nickel division reported an underlying loss before interest, taxes, depreciation and amortisation of A$10.8-million, while a reduction in net revenue to A$92.1-million reflected the fall in the realised nickel price, as well as earlier-than-planned curtailment of production at the company’s Lanfranchi operation.

This was compounded by the company’s decision to put both its nickel operations on care and maintenance and the Deacon orebody reaching the end of its life after producing 2.5-million tonnes of ore containing 58 500 t contained nickel over eight years of continuous production. This resulted in significant negative quotational period adjustments, one-off redundancy costs and severe asset impairments for the full financial year.

Panoramic’s group nickel production fell to 10 864 t in the period under review, from 19 301 t in 2015, while nickel sales amounted to 10 367 t, down from 19 547 t in the previous year.

The miner’s average realised nickel price fell to A$5.82/lb from A$8.34/lb in the previous year, which impacted on sales revenue.

Impairment costs totalling A$84.1-million also had a significant impact on Panoramic’s full-year result, including charges of A$30.3-million and A$12-million made against the asset-carrying values of Panoramic’s Savannah and Lanfranchi operations respectively, as well as an impairment charge of A$41.8-million made against the carrying values of the company’s Gum Creek gold assets.

On a positive note, the company’s Savannah operation achieved record production of 9 316 t nickel, 6 011 copper and 476 t cobalt, which Panoramic said was a credit to its team at Savannah, most of whom have been made redundant.

The company noted that it was now well placed to ride out the current low nickel price environment and that its efforts were now focused on planning to restart its operations under a lower cost regime once the nickel price recovers.

Edited by Creamer Media Reporter

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