Productivity Improvements and Identified Risks

Productivity Improvements = Value Enhancement

The Feasibility Study and the Savannah FS Optimisation reported here have maintained a conservative approach, generally adopting conventional mining and processing approaches, established and proven at Savannah over the 12 years of operations.  As a result, the Company has a high level of confidence in the ability to deliver the Savannah FS Optimisation outcomes.

During the Savannah FS Optimisation process, Panoramic identified a number of opportunities to provide step-changes in productivity and cost reduction. These opportunities involve the adoption of new and emerging technologies, and include:

  • Ore passes – shorter loader tramming distances to increase productivity;
  • Battery loaders – reduces heat generation and diesel particulate emissions, resulting in lower ventilation and cooling requirements;
  • Surface-operated remote bogging – reduces manning requirements, continuous bogging;
  • Alternative truck technology – smaller, lighter units, faster travel times, lower capital and operating costs;
  • Small drive sizes – reduces waste moved, therefore lower development costs; and
  • Drilling automation – increases utilisation, improved quality resulting in less rework.

More work is required to advance these opportunities to Feasibility Study standard. These opportunities will be assessed as part of the next phase of optimisation work due to be completed during the December 2017 quarter.

Identified Risks

A number of project risks were identified as part of the Feasibility Study (refer to the Company’s ASX announcement of 2 February 2017).  Of the risks identified, the Company considers the following to be the most significant:

  • Delays in access development and/or establishment of the Savannah North ventilation circuit, impacting on the transition from Savannah to Savannah North production; and
  • US$ commodity prices and US$:A$ FX rate.

The Company adopted conservative lateral and vertical development rates in its studies, which are below current Australian best practice for these activities.  In 2015, the Company developed the 1570 Exploration Drill Drive to Savannah North, without experiencing development problems or delays due to ground conditions.  In the event that access to Savannah North is delayed, additional remnant ore at Savannah would be available to maintain milling activities, both from material already in the mining plan, and additional ore sources below the 900 Fault which are currently excluded from the mining plan.

An independent geotechnical assessment of the ground conditions at the location of the proposed Savannah North Fresh Air Rise concluded that apart from the weathered top 35m, ground conditions were favourable for the development of the vent rise.  In the event of delays to establishing the Savannah North ventilation circuit, alternative ventilation strategies would be implemented.

Commodity price volatility and US$:A$ FX rate risks are proposed to be managed using appropriate levels of hedging.

Panoramic notes that the strong appreciation in the US$ cobalt price over the past six months has an important positive impact on the Savannah Project economics.  In this regard, the Company is exploring options to lock in this value.

 

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