Value Enhancement, Identified Risks & Optimisation

Value Enhancement Opportunities

As part of the Savannah FS, Panoramic has identified a number of additional enhancement opportunities which could add significant additional value to the Project, including:

  • Future Resource growth – less than 35% of the potential 2km mineralisation footprint has been tested by Resource drilling. Priority areas for potential additions include east and west extensions to the Upper Zone in close proximity to proposed development;
  • Mine planning and scheduling – detailed review of alternative stope shapes, cut-off grade, and scheduling to lower unit costs, increase production rates and/or improve mined grades;
  • Mining productivity – information management utilising latest technical innovations, waste backfill and haulage, shaft versus decline haulage, driverless trucks, hybrid electric/diesel vehicles;
  • Product optimisation – fine grinding and circuit reconfiguration to improve Ni concentrate grade and recovery. Opportunity to produce split Ni/Co and Cu concentrates;
  • In-country smelting – assess the amenability of Savannah North concentrate for matte production via mini-smelting technology (e.g. top submerged lance);
  • Power – the Savannah FS is based on utilising the existing diesel fired power station. Alternative power options may include solar, gas and hydro-electric, which may provide more favourable power costs;
  • Contractor services – rationalise the number of services currently provided by contractors (e.g. camp services, power generation, concentrate haulage, inbound freight, underground mining services, core drilling); and
  • Employment and procurement – utilise local employment and service providers where possible.

These opportunities will be assessed as part of the next phase of optimisation work.

Identified Risks

A number of key risks have been identified as part of the Savannah FS.  These risks include, but are not limited to:

  • Confidence in geological model, particularly around interpretation of the number and location of major structures;
  • Confidence in Resource estimate due to the wider hole spacing in the Lower Zone;
  • Establishment of Savannah North FAR and its impact on the transition from Savannah to Savannah North production;
  • Geotechnical risks associated with mining Savannah North, particularly the Lower Zone;
  • Metallurgical risks associated with processing of Savannah North mineralisation;
  • Risks associated with re-establishment of underground workings and recommissioning of major plant and equipment;
  • Amount and timing of pre-production costs, production and development rates, and working capital movements in the initial 18 months and their impact on maximum cash drawdown;
  • Unit costs used in the model, which are based on historical or recent actual Savannah costs, may not be reflective of the costs of mining at Savannah North;
  • Current Savannah concentrate offtake agreement expires in April 2020, and future renewals with Sino/Jinchuan or another customer(s) and applicable terms are subject to negotiation;
  • Commodity prices and US$:A$ exchange rate.

Based on the 12 years of continuous operating experience at Savannah, the Company believes it has a sound base for the production assumptions and cost estimates used in the Feasibility Study, and that the risks identified can be effectively managed.

 Optimisation

Panoramic is now proceeding with optimisation studies, focusing on the risks and opportunities identified in the Savannah FS as outlined above.