prudent hedge protects against market turmoil , page-10

Well... punters may be able to trim the share price but they can't clip that hedge. The last announcement had it $109m in the money and that's over half today's market cap. The last dividend was 12 cents a share on a stock currently trading at $1.04 and the recent cost analysis contained the following salient points:

*'Panoramic’s group operating cash cost on a payable nickel basis for the September 2008 Quarter was A$6.05 per lb (approximately US$3.76 per lb at current exchange rates). This payable nickel cash cost profile is significantly below current spot prices and current forward prices.

*Importantly, Panoramic has in place a strong hedge book with a mark-to-market value of approximately A$109 million (as at 27 October 2008). Based on current forward curves the hedgebook will deliver the incremental cash flows to Panoramic of A$45 million (2009) and A$65 million (2010).

*Panoramic has invested heavily at each of its Savannah and Lanfranchi operations over the last year adding significantly to resources which should lead to increased reserves, extended mine life and establishes a strong foundation for delivering organic production growth and delivering operating efficiencies.

*Panoramic is on target to achieve its stated objective of producing 20,000 tonnes of contained Ni annually for at least a further 10 years (group basis).'

End quote

All of the above probably counts for little when sentiment has the market by the throat but this has to be one of the best placed stocks for a swift reversal when the pendulum swings. That hedge protects the bottom line for a further two years yet the market seems to think PAN's margins are under the extreme pressure faced by other nickel miners at present. C'est la vie. Fundamentals will talk in the long run.

Good luck all.

DYOR and caveat emptor

Gupper