01/09/2009 - 15:36

Panoramic's profit slumps 89%

01/09/2009 - 15:36


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Panoramic Resources' net profit has slumped 89 per cent to $5.6 million for the year to June 30, down from $53.3 million the previous year after the company's revenues receded on the back of lower nickel prices.

Panoramic's profit slumps 89%

Panoramic Resources' net profit has slumped 89 per cent to $5.6 million for the year to June 30, down from $53.3 million the previous year after the company's revenues receded on the back of lower nickel prices.

Revenues fell 4 per cent, or $9.7 million, to $228 million for the year as average spot nickel prices dropped to $8.09 a pound from $14.42 a pound in the previous reporting period.

During the financial year, the miner placed the Copernicus nickel joint venture operation on care and maintenance, six months after it came online, and introduced comprehensive cost reduction measures across the group

A final fully franked final dividend to shareholders of 2 cents per share has been declared by Panoramic for the financial year ended 30 June 2009.





Part of the announcement is below:


The major factors contributing to the above variances are as follows:

- Spot nickel prices during the FY2008/09 reporting period averaged $8.09 per pound in Australian dollar terms,
significantly lower than in the previous reporting period ($14.42 per pound), resulting in lower revenue per tonne of
nickel for nickel production not hedged by financial derivatives. Downward final nickel quotational price (QP)
adjustments for Lanfranchi (75%) ore deliveries made in April 2008, May 2008 and June 2008, that were required to
be accounted for in FY2008/09, also had a negative impact;

- Higher production from both the Lanfranchi (100% basis) and Savannah Projects resulted in 26% more contained
nickel being produced (18,752 tonnes) than in the previous reporting period;

- As a direct consequence of cost reduction measures introduced in January 2009 at both the Lanfranchi and
Savannah Projects, and lower diesel fuel costs incurred at the Savannah Project, payable cash costs for the
FY2008/09 reporting period were lower than the previous FY2007/08 reporting period; and

- As a result of significant downgrades in external commodity price forecasts over the estimated mine life of the
Company's producing assets, and from the Copernicus Project being placed on care and maintenance in January
2009, the Company impaired the carrying value of its assets at the Savannah Project and the Copernicus Project
(60%) by $12.8 million and $13.5 million respectively.

Key Financial Points

The Company has weathered the global financial crisis well due to a combination of prudent commodity hedging, an aggressive cost reduction program and record Group production of 18,752 tonnes of contained nickel (17,928 tonnes on an equity basis). Against a very weak commodity price environment in which the average nickel price realised by the Group, after hedging, fell by 30% to A$9.23/lb of payable nickel, compared to A$13.28/lb for the previous year, the Company managed to contain costs which were only 8% higher than last year with Group payable operating costs averaging A$5.29/lb nickel. Significantly, the Group average payable operating cost fell to A$4.58/lb in the June 2009 quarter, reflecting the higher production rates from Lanfranchi, higher grades from Savannah and the benefits of the cost reduction strategy introduced in January 2009. Strong 2nd half production and lower costs resulted in the operations generating surplus cash (after capital and before tax) of $21.2 million for that period.

Net revenue for the year was $228.7 million, down only 4% compared to last year, the higher production offsetting the lower realised price. EBITDA was 27% lower than FY2007/08 at $88.2 million while depreciation and amortisation was up 23% to $49.5 million mainly due to reserve depletion, resulting in a gross profit of $31.7 million (down 56% compared to last year). NPAT (before impairment) was a satisfactory $24.0 million (compared to $53.3 million last year), however asset write-downs after tax of $18.4 million ($17.6 million of which were booked in the 1st half net loss of $8.6 million) dragged the 2008/09 NPAT down to $5.6 million.

Cash flow from operating activities before tax was solid at $54.8 million and net assets increased 24% to $286.3 million. As a result, the Company has maintained its strong balance sheet with cash and current receivables of $95.9 million as at 30 June 2009, no bank debt and only $5.2 million in equipment finance leases.

Final Dividend Declaration

In light of the profit result, solid 2nd half cash flow and strong balance sheet, the Company has declared a fully franked final dividend of 2 cents per share, bringing the total dividend payout for the 2009 financial year to 3 cents per share (fully franked). The Board is pleased to be able to maintain the payment of fully franked dividends to shareholders that commenced in the 2007 financial year.




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