Panoramic Resources is offload its “Lanfranchi” nickel project to Texas-based Black Mountain Metals for $15.1 million, as it looks to the early 2019 restart of its higher-margin “Savannah” nickel, copper and cobalt mine.

Panoramic, which already has the money it needs to restart Savannah, will use the extra cash to maintain a “robust balance sheet”, grow resources, extend Savannah’s mine life and “pursue other opportunities”.

The stock jumped from 43.5c to an intraday high of 47.2c on the news. It’s traded between 27.8c and 67c over the past year.

In 2004, Panoramic shelled out $26 million for the Lanfranchi mine after it had already produced more than 100,000 tonnes of nickel over the previous 15 years.

Panoramic managing director Peter Harold said Lanfranchi had generated profits for the company before it was placed on care and maintenance in August 2015 due to the low nickel price.

The Panoramic Resources (ASX:PAN) share price over the past year.
The Panoramic Resources (ASX:PAN) share price over the past year.

“While we see Lanfranchi as a potential future source of nickel ore, with considerable exploration upside, its relevance to Panoramic has been displaced by the much larger and higher margin Savannah Project, which is where we see the next chapter of growth for our company,” he said.

“We believe Savannah is a Tier-1 base metals asset, offering robust operating margins and a long mine life, as well as considerable exploration upside still to be fully evaluated.

“We are very excited about the restart of operations at Savannah and expect the project to deliver robust returns from its nickel, copper and cobalt production over the initial mine life of eight plus years.”

Thee $65 million Savannah project, which started operating in late 2004, was placed on care and maintenance alongside Lanfranchi pending a sustained recovery in the nickel price.

Nickel Recovery

Nickel miners are a lot more optimistic about the market than they have been in a long time thanks to strong demand for stainless steel and lithium-ion batteries to power electric cars.

Rising demand, accompanied by declining stockpiles and a lack of new mines coming into production, saw the price of the base metal hit a three-and-a-half year high of $US15,700 a tonne in April.

The price of nickel over the past year.
The price of nickel over the past year.

The price has come off in recent months — currently trading for around $US12,615 — but mining researcher Wood Mackenzie is predicting a long-term price of around $US25,000.