I’m in management (sales) and part of my role is to set yearly budgets/ targets/ guidance oh behalf of my sales team. When I provide these numbers to senior management, I always understate these numbers by about 20% - 25%. This provides my department with ample buffer to overshoot on the numbers and work our bonuses yet exceed our numbers with no disappointments (win/ win for everyone). I have been doing this for years, most savvy leadership will take the same approach.
It’s the goof of all time - understate and exceed.
Which takes me to my next point, in my opinion, Panoramic’s management & board would have taken the same approach when putting together guidance for FY23. Do not be surprised if they drive higher production, lower cost or get to nameplate sooner to simply say “see we beat guidance”.
The $40m forecast for sustaining mine costs & capital growth expenditure (as I understand) is to prepare the mine for 2025, 2026, 2027 and should not apply to the extent on a reoccurring basis up to those years. I understand this was all brought forward for FY23 spend (Management may be trying to capitalise on the higher nickel price to justify hitting this spend earlier on).
Once this cost drops off in FY23 and the mine hits nameplate in FY24 then AISC should get us us back into the $6’s(aud) per pound (not including corporates & drilling).
Most of the cost increases are coming from higher fuel prices, shipping and labour. For example, fuel prices are already down about 24% from the recent peak and should work at reducing current and future costs for shipping.
The above also does not include the upside beyond nameplate on favourable discoveries or additions.
Don’t listen to the dribble coming from others, patience is required here. LME nickel inventories (as at 21 July 2022) are down to a whopping 60,984t. That represents about a 10,000t drop since the beginning of the month.
Nickel prices are also back at $22,200(usd) or $32,173(aud) = $14.58(aud) per pound.
Nickel prices have bounced beautifully off the current long term trend line.
I anticipate we base out (properly) between $0.175 and $0.195 for a few more weeks before breaking out to the upside to re-test the 200sma (currently sitting at about $0.25) and if PAN is not taken over sooner then I envisage we move back to our recent highs or higher by early to mid 2023 - Bald call on my behalf but happy to wear it
PAN Price at posting:
18.0¢ Sentiment: Buy Disclosure: Held
(20min delay)