Oct 17 Savannah Feasibility Study

October 2017 – Savannah Feasibility Study Presentation

Project Background

The Savannah Nickel Project is located 240km south of Kununurra in the East Kimberley region of Western Australia, and consists of a nickel sulphide orebody, underground mine, process plant and associated infrastructure. Panoramic was formed in 2001 for the purpose of developing Savannah. Panoramic successfully commissioned the Savannah Project in late 2004, and over a twelve year period, Savannah milled 8.5 million tonnes at an average grade of 1.29% nickel, 0.65% copper and 0.06% cobalt to produce 1.22 million tonnes of concentrate containing 94,600 tonnes nickel, 53,000 tonnes copper and 5,000 tonnes cobalt. In FY2016, Savannah achieved a record year with 9,845 tonnes nickel, 6,011 tonnes copper and 476 tonnes cobalt in concentrate produced.  The Savannah Project was placed on care and maintenance in May 2016 pending a sustained recovery in the US$ nickel price and confirmation that Savannah North was a viable project.

In July 2018, the Company announced a A$40 million restart finance facility with Macquarie Bank Limited and the Board made the decision to restart the Savannah operations with first concentrate schedule to be shipped during the first quarter 2019.

Savannah North was discovered in February 2014, when drill-hole KUD1525, targeting the interpreted fault offset of the main Savannah orebody, intersected 89.3m @ 1.60% Ni, 0.76% Cu and 0.12% Co (refer to the Company’s ASX announcement of 18 February 2014).  Resource drilling commenced in early 2015, and in October 2015 the Company released the maiden Savannah North Mineral Resource estimate of 6.88 million tonnes at 1.59% Ni for 109,600t Ni (refer to the Company’s ASX announcement of 1 October 2015).

In January 2016, the Company released the results of a Scoping Study on the maiden Savannah North Mineral Resource estimate, which indicated a positive economic outcome given the production, revenue and cost assumptions modelled (refer to the Company’s ASX announcement of 27 January 2016).

In February 2016, the Company resumed underground drilling at Savannah North with the purpose of infilling and converting areas of Inferred Resource to Indicated category, while also testing for extensions to the Resource both up dip to the east and down dip to the west and north.  The program was completed in July 2016 and culminated in the release of an upgraded Savannah North Mineral Resource estimate of 10.27 million tonnes at 1.70% Ni for 175,100t Ni, 74,400t copper and 12,700t cobalt in August 2016 (refer to the Company’s ASX announcement of 24 August 2016).

On 2 February 2017, the Company announced the results of the Savannah Feasibility Study.  The scope of the Study was to evaluate the technical and financial viability of recommencing operations at Savannah, based on mining the remaining Savannah orebody plus the Savannah North deposit.  The Base Case for the Study assumed no material changes to recent Savannah mining and processing practices and that the operation would continue to produce a bulk Ni-Cu-Co concentrate sold under similar terms as the current contract with Sino/Jinchuan, which expires in April 2020.  Based on the results of the Savannah Feasibility Study, a maiden Ore Reserve for Savannah North, of 6.65Mt @ 1.42% Ni, 0.61% Cu and 0.10% Co for contained metal of 94,500t nickel, 40,900t copper and 6,700t cobalt, was declared.  The Savannah Feasibility Study demonstrated a 10 year mine life, producing approximately 99,200t Ni, 51,500t Cu and 6,900t Co in concentrate over LOM, with initial (pre-production) capital requirements of $20M, and payable operating cash costs of US$3.30/lb (refer to the Company’s ASX announcement of 2 February 2017).

During 2017, the Company has continued to optimise the February 2017 FS.  On 20 July 2017, the Company released the results of the Savannah FS Optimisation (refer to the Company’s ASX announcement of 20 July 2017). The July 2017 Optimisation focussed on improvements to the mine plan and schedule and review of major operating cost centres to reduce operating costs.  The optimisation work resulted in a revised mine plan with an approximate 8.3 year mine life, due to faster mining rates and the omission of some low-grade stopes.  The changes to the mine plan and cost saving initiatives, resulted in a reduction in operating costs of over 10% compared to the February 2017 FS.

Updated Feasibility Study Scope

The Updated FS reported was the culmination of optimisation work of the February 2017 FS conducted during 2017.  The objective of the Updated FS was to address the following key areas:

  • Mining productivity – complete the assessment of alternative mine designs and schedules, and finalise the preferred production scenario;
  • Product optimisation – complete the metallurgical testwork on Savannah North samples to confirm the processing characteristics and provide concentrate specifications for marketing negotiations with potential offtake partners;
  • Capital costs – review and update pre-production and early-stage capital expenditure requirements to reflect September 2017 plant and equipment pricing;
  • Operating costs – update the major cost areas (e.g. labour, power, consumables, contractor services) to September 2017 prices; and
  • Marketing and financing – continued engagement with potential off-take partners and financiers.

Cautionary Statement

There is a low level of geological confidence associated with Inferred Mineral Resources and there is no certainty that further exploration work will result in the determination of Indicated Mineral Resources or that the production target itself will be realised.


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