PAN panoramic resources limited

thoughts/questions, page-8

  1. 14,172 Posts.
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    Reecevan,

    Perhaps the most important thing to remember is that PAN is a relatively high cost producer, so yes well leveraged to the upside on this mc if all goes well, but a high risk investment where heavy losses are easy if all doesn’t go relatively well. Certainly not a widows and orphans stock, or one on which to bet the house.

    Secondly it is particularly vulnerable while it is ramping up, currently running circa 70% of output. As most of the cost of the operation is fixed (or near fixed) just getting to full capacity will drop unit costs dramatically (as presented in the companies LOM projections). The next 6 months being pretty critical given debt due in Dec (if not rolled over further).

    Given costs are to drop as ramp up completes return to C&M is imo unlikely and would need to nickel price to drop quite a bit more, or for a major adverse event at the mine. I wouldn’t rule out a CR to support the debt repayment though, or a change of CEO, or a TO/merger offer. Such binary events would make me very wary of putting too much faith in chart reading either. Even the next QR probably binary enough to blow them out of the water in either direction.

    I also wouldn’t place too much emphasis on lack of exec/BOD skin in the game. It’s not uncommon in the sector. I can understand folk with their income in a cyclical industry not wanting to also have their investments there, and esp not in more marginal companies like PAN, even if they were to see them as good investments. Many of these folk will have been made redundant in previous downturns, perhaps even spending spells driving cabs or whatever.

    Safe to bet ten chochie bars on, but not the house.

    EL
 
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