Bit of talk from D & D. I think I've mentioned before I was dissappointed PAN didn't take up the deal to buy Cracow. At the time the gold price was around $700 an ounce. Apparrently it is performing well for Newcrest currently with last quarter's grades better than expected. A chance gone begging IMO.
MiningNews - Nickel price won’t drop below $6/lb for long: Panoramic
Thursday, 7 August 2008 Kate Haycock
THE Kambalda nickel province will be uneconomic if the metal’s price slips below $US6 per pound, according to Panoramic Resources managing director Peter Harold.
Speaking to media on the sidelines of the Diggers & Dealers conference in Kalgoorlie, Harold said it was difficult to believe nickel would fall to below $US6/lb ($13,200 per tonne) on a long-term basis.
“If it does, everyone in Kambalda shuts down,” he said.
Instead, Harold said any price falls would be temporary and the price would again move up as higher cost producers were driven from the market.
Nickel plays in Australia would not go out of business even with the price fluctuations, he said.
“Everyone doesn’t just stop producing – us and Mincor Resources and Independence Group, we’ve all got cash to keep us going, a buffer.
“We’ll keep going, we owe it to our people, and there have been lots of times in the history of the Australian mining industry that prices have gone below the cost of production and people have kept going.”
Overnight the spot nickel price was $US17,678/t or around $8/lb per pound.
Nevertheless, he said a price of around $20,000-25,000/t would be preferable and even with price volatility, the stainless steel business would continue to support nickel with supply growth in the realm of some 25,000-30,000t of new nickel needed each year.
“It keeps the stainless steel boys happy, and we’re happy because we’re getting a good margin on our business,” he said.
In the current climate of plunging equity and commodity prices, Harold was frank about the dangers for smaller, single commodity plays.
He said Panoramic is “ridiculously cheap” and vulnerable to a takeover.
Panoramic – formerly Sally Malay Mining – operates two mines in Western Australia, the Savannah operation and the Lanfranchi joint venture, which produced 14,883t of contained nickel in the 2007-08 financial year.
Mining at the company’s third project, Copernicus, a 60:40 joint venture with junior Thundelarra, began last month.
Harold said the company’s current market capitalisation of around $370 million was “ludicrous”.
“You take off $120 in cash and the hedge book, which is $50 million ahead, leaves you with circa $200 million value on our assets, and means each asset is worth about $100 million each,” he said.
The company’s share price is trading at under $2, down over 80% from its all-time high of $6.21 in November last year.
Harold called the company’s current share price and market value “an insult to the blokes who operate our businesses”.
Despite its falling market capitalisation, Panoramic is cashed up and looking for additional opportunities in Australia in gold or copper-lead-zinc and nickel.
The company had done the numbers on Newcrest’s Cracow project as a potential buy, but Harold said the $A200 million asking price was beyond Panoramic’s reach.
Beyond Cracow, the company had several potential deals and discussions on the boil in gold and base metals.
Panoramic is re-negotiating an offtake agreement with Jinchuan for offtake beyond 2010 for the Savannah mine, while BHP Billiton has offtake rights for the Lanfranchi operation.
Harold told journalists Panoramic’s nickel production was well-placed in those discussions and for future offtake deals with Jinchuan and BHP because it is low in talc, meaning it costs less to process, so both Jinchuan and BHP blend the lower talc nickel from their own productions with their higher talc resources.
Harold said Panoramic’s cash costs were up 14% year on year to around $A6/lb.
At the Savannah operations, production for the June quarter was 1818t nickel, 1006t copper and 94t cobalt, down from 1980t nickel, 1061t copper and 108t cobalt produced in the March quarter.
Meantime, full year production at Savannah was 7579t nickel, 4072t copper and 409t cobalt, in line with forecasts.
At Lanfranchi, production for the June quarter was 2184t contained nickel, down from 2403t contained nickel in the March quarter, as a result of a 15% fall in the head grade due to more Helmut South ore and less Winner ore being produced.
Full year contained nickel production was 7304t, a 40% increase on 2006-07.
Panoramic has forecast a net profit for the year of $60 million.
PAN Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
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