Creditors in felled nickel miner Panoramic Resources have voted to approve a rescue proposal from ASX-listed shareholder Zeta Resources this afternoon.
Creditors in felled nickel miner Panoramic Resources have voted to execute a rescue proposal from ASX-listed shareholder Zeta Resources this afternoon.
Zeta lobbed the deed of company arrangement to pull Panoramic and its entities out of administration late last month, after the WA nickel miner called in FTI in December.
Panoramic’s Savannah nickel mine in the East Kimberley was the first domino to fall amid the nickel price crunch, which has since led the likes of BHP Nickel West and IGO to mothball operations.
At a meeting today, creditors voted to implement the DOCA, which if approved by the courts, would involve the transfer of 100 per cent of Panoramic’s shares to Zeta.
The rescue bid, however, doesn’t offer any consideration to existing shareholders.
Unsecured creditors would receive 9.7 cents in the dollar. Administrators warned if Panoramic were to enter liquidation, they would receive 1.83 cents in the dollar.
The funding arrangement would see Zeta spend $3.35 million in operating costs and subscribe for convertible notes in Panoramic of up to $15.5 million.
The implementation of the DOCA hinged on a number of conditions, including Zeta completing a transaction to fund the convertible notes.
Another condition was a Supreme Court ruling on a $1.27 million claim from creditor Barminco, which was the underground mining services contractor at Savannah.
Late on Friday afternoon, the court ruled the claim wasn’t a personal liability under the administration, which helped clear the way for the DOCA vote this afternoon.
Had the court ruled in the other direction, Barminco’s claim would have skipped the queue, which the administrators previously said would impact the return to creditors.
In December, Panoramic called in FTI administrators Daniel Woodhouse, Kathryn Warwick and Hayden White off the back of flailing nickel prices and long-running issues with its processing plant.
Those issues led to missed production targets and delayed concentrate shipments, then impacting sales and overall financials, according to the administrators' report.
A month later, the administrators moved to mothball the Savannah mine, being the third time it was shelved in two decades. It impacted 149 direct workers and 300 contracts, majority of which were employed by Barminco.
The DOCA conditions also required Zeta and Trafigura- which had a funding deal with Panoramic- to agree to revised terms for its secured debt of about $57 million.
Panoramic took on the loan from Trafigura in order to help fund the second restart of operations in 2021, after the mine was mothballed for a period of 15 months.
Zeta previously attempted to block a deal between Panoramic and fellow nickel miner IGO in 2019. The company is currently in a trading halt.
