when fundamentals are recognised again..., page-4

Hi Pattyp

I've been following the increase in LME nickel stocks too but believe the surge in nickel-in-store may be comparatively short-lived. Too many miners are simply not profitable at these levels and this has already led to mine closures and moth-balling of plants across the globe.

This makes PAN's terrific hedge book look smarter by the day. The two year insulation it provides (prospective investors should read the latest update) should see them through this slump in the spot nickel price (forecast to improve by mid next year). To have so much cash and a hedge book that is $109m in the money makes PAN a rarity in current conditions. The following excerpt from the recent AGM Presentation explains the hedging situation nicely:

'Panoramic has consistently delivered strong cash margins from its Savannah and Lanfranchi nickel operations.
Panoramic’s group realised operating cash margin remains healthy.
Panoramic’s valuable hedge book mitigates risk by delivering incremental cash flows of A$45 million (2009) and A$65 million (2010) based on forward prices as at 27 October 2008.
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Panoramic’s nickel mines at Savannah and Lanfranchi are well positioned and expected to continue to make a strong operating cash contribution to the group into the foreseeable future.
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Panoramic’s hedge book (mark-to-market value of A$109million as at 27 October 2008 using Ni US$9,824/t & FX 0.6217) will ensure that Panoramic will realise nickel prices well in excess of the current forward nickel price over the next two financial years.'

I guess our problem is that most investors simply lump PAN in with the broader, depressed nickel sector. But given what has recently happened with another of my cash-rich holdings, PPP (where a JV partner has picked up a significant stake at a 50% premium to the market price then operating), PAN might prove attractive to predators looking to exploit the SP mauling it has endured (down 75% in 6 months).

I guess at worst we reap a very attractive dividend while we wait it out...

Good luck. DYOR

Gupper