Productivity Improvements and Identified Risks

Productivity Improvements

The Updated FS has continued the conservative approach adopted by Panoramic, of applying conventional mining and processing practices 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 Updated FS outcomes.  The Company has also been evaluating 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;
  • Alternative truck technology – smaller, lighter units, faster travel times, lower capital and operating costs;
  • Small drive sizes – reduces waste moved, requires less ground support and lowers development costs;
  • Drilling automation – increases utilisation, improved quality resulting in less rework; and
  • Ore sorting – rejection of waste prior to milling, improving head grade and increasing milling capacity.

More work is required to advance these opportunities to Feasibility Study standard. These opportunities will continue to be assessed for potential adoption by the Company in the future.

Key Risks

An updated risk assessment for the project highlighted the following key project risks:

  • Capital costs and recommissioning timeframe associated with refurbishment of the processing plant;
  • Delays in access development and/or establishment of the Savannah North ventilation circuit, impacting on the transition from Savannah to Savannah North production;
  • Concentrate grade and metallurgical recoveries; and
  • US$ commodity prices, diesel fuel price and US$:A$ FX rate.

Panoramic’s estimates of capital costs to refurbish the processing plant have increased since the February 2017 Feasibility Study.  The Company has engaged two reputable engineering firms with prior plant refurbishment experience to provide estimates of refurbishment time and costs. The Company would engage a project manager to oversee the refurbishment works. The Company has allowed five months for plant refurbishment and recommissioning. Additionally, a staged ramp-up to full production over three months has been assumed.

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 unforeseen geotechnical issues impacting completion of the ventilation raisebore hole, an option to complete the fresh air raise using the horadiam development method would be available.  If delays to establishing the Savannah North ventilation circuit impacted production, alternative temporary ventilation strategies would be implemented.

During the ramp-up and initial operating phases, only Savannah ore will be processed.  Based on its 12 year operating history processing this material, the Company has a high confidence that the modelled processing recoveries and concentrate grades can be achieved.  In regard to Savannah North, grade and recovery parameters are derived from a comprehensive metallurgical testwork program, the results of which have been peer reviewed by an independent metallurgical consultancy.

Commodity price volatility and US$:A$ FX rate risks are proposed to be managed using appropriate levels of hedging.  Structures that allow the Company to retain exposure to higher nickel prices, such as bought put options, may be preferred over outright forwards.  Panoramic notes that the strong appreciation in the US$ cobalt price has an important positive impact on the Savannah Project economics.  In this regard, the Company is exploring ways to lock in this value.


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