A net profit of between $A60-70 million ($US57.6-89.1 M) has been projected by Panoramic Resources (ASX: PAN) for the financial year just ending based on its equity production for 2007/08 of slightly more than 15,000 tonnes of contained nickel.
The company has shed its name of Sally Malay Mining and also changed the name of its Kimberleys region mine of that name to Savannah.
The projected profit after tax is lower than the previous fiscal year's of $A88.1 M ($US84.6 M), due largely to the lower but still healthy nickel price, stepped-up exploration and the development of the Copernicus decline underground mine, near the Savannah mill, in partnership with Thundelarra Exploration NL (ASX: THX).
This has been an impressive run for a company that in September 2001 listed after raising $A3 M ($US2.8 M) to prove the long-dormant Sally Malay discovery in the East Kimberleys, 300 kilometres south of Kununurra. Its initial market capitalisation was $A12 M ($US11.5 M) and it's now in the $A850 M ($US816.8 M) range.
While it was a late starter at Kambalda, compared to Mincor Resources (ASX: MCR) and Independence Group (ASX: IGO), it has joined these two now popular mining stocks as key and highly profitable performers in the Western Australian nickel sulphide industry - all by re-igniting former WMC Resources mines. The market is watching the progress of all three on the basis of whether predators like Xstrata Nickel and Norilsk will take a tilt at them, after their respective takeovers of LionOre International and Jubilee Mines.
Panoramic's Managing Director Peter Harrold said that the company's 10 year plan was to increase group nickel metal output to at least 20,000 tonnes per annum; and to achieve organic growth through advancing regional exploration at both the Lanfranchi complex at Kambalda (that includes the new Deacon discovery) and from the Savannah tenements.
Harrold said the objective also was to become a significant and diversified mining house.
The Lanfranchi mine is 75% owned by Panoramic in partnership with Canadian Brilliant Mining Corporation (TSX-V: BMC) which took out the local private partner Donegal Mining in May 2006.
The Lanfranchi mine has had a total historic production - largely from the WMC era - of 110,000t of nickel metal and Panoramic believes there is potential to repeat the output capacity by exploration on the 10 km of what is known as the Northern Basal Contact.
There is a budget of $A4 million($US3.84M) this calendar year to drill further into the Lanfranchi and nearby Schmitz and Helmut channels. With deeper finds such as Deacon the mine life at Lanfranchi has been extended from 2012 to beyond 2020 and the tempo of regional exploration is likely to build up to $A10 M ($US9.61 M) per annum.
The Savannah mine was originally an open pit but all ore is now sourced from underground and current production produces about 100,000tpa of concentrates containing 8,000t Ni, 4,500t copper and 400t cobalt.
The discovery of deeper ore systems has extended Savannah's life expectancy like Lanfranchi from 2012 to beyond 2020 as a result of the new reserves from the Deeps, North Ore Zone, Copernicus and other regional deposits.
The 60% owned Copernicus has an open pit development underway and will provide first ore in the September quarter, while a decision to go underground on this plunging ore system should be made in the December quarter.
Savannah sends all its concentrates to Jinchuan Group in China, shipped out through the port of Wyndham on a contract that ends in March 2010. Lanfranchi ore is delivered to the Kambalda concentrator, now part of BHP Billiton following its takeover of WMC Resources) and this arrangement is contracted to February 2010 with BHPB having an option to extend this to 2019.