An ASX-listed shareholder in Panoramic Resources has lobbed a rescue bid to potentially pull the shuttered nickel miner out of administration.
An ASX-listed shareholder in Panoramic Resources has lobbed a rescue bid to potentially pull the shuttered nickel miner out of administration.
Zeta Resources, a resources-focused investment holding and development company, has put forward a deed of company arrangement for Panoramic and its entities.
The owner and operator of the Savannah nickel mine in the East Kimberly called in administrators in December off the back of crumbling nickel prices and long-running issues with its processing plant.
It resulted in the nickel, copper cobalt mine being mothballed for the third time in two decades and put the jobs of 149 staff and 300 contractors on the chopping block.
Majority of those contractors were employed by Barminco, which was the underground mining services contractor at the Savannah mine and processing operation.
In a recent report prepared for creditors, FTI administrators Daniel Woodhouse, Kathryn Warwick and Hayden White recommended Zeta’s proposed DOCA.
They cited it was the best option available to maximise returns given the volatility of the nickel price and its declining trend.
The DOCA proposal involves the transfer of 100 per cent of Panoramic's shares to Zeta.
But the deal doesn't offer a pay out for existing shareholders and unsecured creditors would get just 9.7 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.
Among the conditions to the DOCA being executed is the Supreme Court making a call on whether $1.2 million owed to Barminco is a priority claim under the administration.
The administrators made an urgent application to the Supreme Court last month to determine whether it was a priority claim, being a point of difference between Barminco and the administrators.
If the court were to determine the contractor did have a priority claim, it would impact the return to creditors and the execution of the DOCA, the administrators said.
Under the proposed DOCA, Zeta and Trafigura- which had a funding deal with Panoramic- would need to agree to revised terms for its secured debt, in the order 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.
In the report, Panoramic’s troubles were pinned on performance issues with the Savannah processing plant and trembling nickel prices.
Those issues resulted in missed production targets and delayed concentrate shipments, then impacting sales and informing the need to raise capital in July last year.
Declining nickel prices, following the deluge of supply from Indonesia, also impacted the mine’s ability to generate sufficient revenue, the report read.
Before calling in administrators, Panoramic launched a strategic review to assess a potential acquisition, asset sale or partnership option- all of which proved fruitless.
ASX-listed Zeta Resources previously attempted to block a deal between Panoramic and fellow nickel miner IGO in 2019.
IGO is also a shareholder in Panoramic, a stake in which it aquried through the $1.3 billion Western Areas deal.
Creditors will meet to discuss the future of Panoramic and the DOCA at a meeting on October 2.
