The battle for control of Panoramic Resources has taken another twist with Western Areas emerging on the register as part of a $90 million raising by the beleaguered nickel miner.
Western Areas will take a 19.9 per cent stake in Panoramic by investing $28.6m at 7¢ a share as part of a $29m placement.
Panoramic will raise a further $61m via a 1.15-for-one rights issue. The price of the raising represents a hefty 41.7 per cent discount to the company’s last traded price of 12¢.
The raising will dilute the stake held by Peter Sullivan’s Zeta Resources from 35.2 per cent to 20.1 per cent as well a diluting the 5.9 per cent stake held by Andrew Forrest’s Squadron Resources.
It will increase the company’s shares on issue 763.1m to more than 2 billion.
Western Areas managing director Dan Lougher said the raising would ensure that the Savannah project was production-ready for when a decision was made to restart operations.
“We are also excited by the near-mine and regional exploration opportunities at the Savannah project,” he said.
Panoramic suspended operations at Savannah last month, citing travel bans and border closures introduced by the State Government in response to the coronavirus pandemic.
However Panoramic had already been battling a protracted and trouble-plagued restart of operations at Savannah for more than a year.
The cash raised will allow the cash-strapped Panoramic to repay $34.1m in debt, recapitalise the company, provide working capital for the next 14 months, de-risk its flagship suspended Savannah nickel mine in the East Kimberley, positioning it for a profitable restart.
The latest corporate interest in Panoramic follows a $314m scrip tilt for the company by IGO, which it eventually abandoned late last year after being rebuffed by the company’s board.
At 12¢, the company’s market capitalisation stands at about $91m.
As part of the arrangements, Mr Sullivan will step down as chairman to be replaced by Nick Cernotta, but retain a position on the board as a non-executive director.
Panoramic’s managing director Victor Rajasooriar said Mr Sullivan had stepped up to take on the chairman role to provide much needed continuity during a time of significant board and management change late last year.
“However, with the significant recapitalisation of the company as a result of the offer and the introduction of a new strategic shareholder, Peter has formed the view that it was the right to time to transition to a new, independent chairman,” he said.
Western Areas will be given a chance to take a seat at the company’s board under the terms of the raising and will provide technical assistance with Savannah.
Investors appeared to welcome Western Areas move, sending its shares up 6¢, or 2.7 per cent, to $2.28 at 9.10am.
Mr Lougher said the investment was consistent with the company’s strategy of investing in promising new energy vehicle focused opportunities at attractive entry points in the cycle.
“The company’s robust cash balance has enabled the company to move quickly to secure this opportunity, whilst retaining balance sheet strength to continue the uninterrupted development of the Odysseus project at Cosmos,” he said.
RBC Capital Markets analyst Alexander Hislop described the investment as relatively low-risk given Western Areas’ scale and balance sheet, with potential for material upside should the ramp-up issues at Savannah be addressed and the project deliver to prior parameters.
