14/11/2019 - 14:28

IGO reviews takeover after Panoramic update

14/11/2019 - 14:28

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Takeover target Panoramic Resources revealed today operational performance at its Savannah nickel project would be below previous forecasts over the next four months and that it would need to raise extra capital, with bidder Independence Group saying it would now review its offer.

Panoramic says it expects operational performance at the Savannah nickel mine to remain below forecasts into the June 2020 quarter.

Takeover target Panoramic Resources revealed today operational performance at its Savannah nickel project would be below previous forecasts over the next four months and that it would need to raise extra capital, with bidder Independence Group saying it would now review its offer.

The company announced today a below-budget operational performance during the September quarter, and said it would be seeking to raise funds to make up for lost revenue through a potential rights issue.

Panoramic said the Savannah nickel mine floundered due to an underperformance of the underground paste filing system, impacting on the stoping sequence, and a lower nickel grade due to hanging wall failure and paste dilution in two stopes.

The company said the mine also had continuing equipment availability issues.

Panoramic said it expects operational performance to remain below forecasts in the short-term and into the June 2020 quarter, while the company transitions away from the Savannah remnant orebody into the Savannah North orebody.

“Over the life of mine, the majority of revenue will be generated from the nickel concentrate produced from Savannah North with significant revenue also coming from the copper and cobalt by-product credits,” Panoramic said.

Its new managing director Victor Rajasooriar has commenced an operational review of the Savannah project, with key objectives including stabilising and improving short-term operational performance.

The announcement comes ten days after Independence Group launched an off-market takeover for the company for $312 million.

Panoramic said it would continue to review the highly-conditional offer and has advised shareholders not take action until they have received a formal recommendation from the board.

The company said it had already breached a number of conditions in relation to the offer, including the failure to appoint a technical expert (of IGO’s choice) to complete a report on the Savannah mine within the required time frame.

“It is open to IGO to rely on any breach of these conditions to terminate its offer, or to waive any breach,” Panoramic said.

Responding to the operational update and breaches, IGO said it would review its options in relation to the offer.

IGO maintains its preference that an expedited and thorough due diligence process be completed and has demonstrated its willingness to engage directly with the Panoramic board,” IGO said.

“This is required to allow IGO to confirm whether or not to proceed with its offer despite the breach or likely breach of the offer conditions.”

IGO has requested Panoramic to provide the company with due diligence access and recommended that Panoramic shareholders support the offer.

Shares in Panoramic Resources were down 20.69 per cent to trade at 34 cents per share, while shares in Independence Group were up 0.64 cents to trade at $6.28 per share, as at 4:10pm AEDT.

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