Panoramic eyes big picture as opportunities emerge

Panoramic Resources might be in the unloved nickel sector but its healthy cash position has allowed it to make some aggressive diversification moves via acquisitions.

It has been a busy few months for the nickel company as it has added platinum group and gold assets in Western Australia and Ontario, Canada.

The market has not loved Panoramic any more for its activity, but managing director Peter Harold said the acquisitions were of assets the company had been eyeing for some time and would help both diversify and push it towards the ASX 100, where it would achieve greater relevance for investors.

“It is too hard to be in the mid-level space,” Mr Harold told WA Business News.

In its diversification strategy, Panoramic is adopting a similar tactic to that when it started as Sally Malay Mining 10 years ago – with the purchase of nickel sulphide assets in the Kimberley and Pilbara from owners who were no longer interested in these opportunities.

Panoramic now produces nearly 20,000 tonnes of nickel a year, giving it enough cash flow to be an active investor in new areas.

Early last year it bought the Gidgee gold project near Wiluna and in May it spent $8 million buying the Wilsons project within the Gidgee tenement package from Apex Minerals. 

Last month it bought a 70 per cent interest in another gold project, Mt Henry, near Norseman, from Matsa Resources in a cash and scrip deal worth around $15 million.

Also in May the company purchased the Panton platinum group metals project in the eastern Kimberley from Platinum Australia for $5.25 million and a royalty. 

That followed a $40 million scrip bid for Magma Metals, which owns the Thunder Bay North platinum group metals project in northern Ontario, Canada, as well as a range of gold and base metals exploration projects in WA.

This month, Panoramic moved to compulsory acquisition of the remaining Magma shares after reaching more than 92 per cent acceptances. 

Panoramic sweetened its initial offer to include one of its shares for every seven Magma shares.

Panoramic used long-standing advisers Orion Corporate Advisory out of Melbourne and Macquarie Capital’s Peter Watson in Perth, as well as King & Wood Mallesons partner Geoff Rogers for its legal work.

Nedlands-based Magma, which was dual-listed in Australia and Toronto, appointed Gresham as its corporate adviser and Jackson McDonald as its local lawyers.   

Mr Harold said his company did much of the deal making analysis internally for the asset acquisitions but brought in advisers for the far more complex demands of an on-market takeover across two jurisdictions.

He said the assets Panoramic had purchased were ones that it had chased for some time, but had failed previously to come to an agreement with the owners.

The assets fitted with Panoramic’s strategy and existing operations and it appears to have taken a tougher market to shake them loose.

“You only get one chance; once they are sold you don’t get another opportunity,” Mr Harold said.

“We have been reasonably aggressive in M&A but we think we have paid a fair price.

“This is a hell of a lot cheaper than it was six months ago.”

Mr Harold said investors had thrown their switch to ‘risk-off’, and had withdrawn from the market, prompting a revision of prices among asset owners.

“I think in a lot cases things have come back to fair value or even a bit below,” he said.

 “A lot of mid-cap guys have been pretty heavily sold off for a number of reasons; we have taken advantage of that.”

But Mr Harold acknowledged weaknesses in Panoramic’s own share price and said he had been cautious in the use of scrip.

“We don’t like to give away equity at 60 cents (a share),” he said.

“That is why we put the buy-back in place.”

And he said Panoramic had now put its hands back in its pockets; the buying spree was over.

“We have pretty well done all the things we have looked at over the past 12 months,” Mr Harold said.

“Now we have a lot of work to do.

“We have purchased four options, if you like. They are not operating mines, we don’t have to press the button on any one of them.”