Around 140 jobs will be lost after the administrators of Panoramic Resources (ASX:PAN) decided to suspend mining at the company’s troubled Savannah nickel mine in WA’s Kimberley region.
The decision is the second in a week from miners; last Friday, Core Lithium confirmed that it was suspending operations at its Finiss lithium mine in the Northern Territory and would continue to process stockpiled ore to maintain cash flow.
The news about Savannah comes 26 days after the administrators from FTI were appointed on December 12, following Panoramic’s attempt to conserve cash and cut costs.
The administrators indicated at the time of their appointment that they would continue the Savannah mine operation to generate cash and help pay down debt and other liabilities.
However, the slumping price did the company no favors, as metal from Indonesian-Chinese-owned mines and processing facilities continued to contribute to the global nickel surplus.
In fact, nickel prices fell by 45% in 2023 due to the boom in metal production from Indonesia.
“While operations have continued, including a shipment of approximately 10,000 tonnes of nickel concentrate on January 3, 2024, nickel prices have continued to trend lower,” the administrators said in a statement to the ASX on Tuesday morning.
“After further engagement with major creditors, key suppliers, and other stakeholders, the administrators have determined that operations at the Savannah Nickel Project will be suspended over the coming days.
“As a consequence of the decision to suspend operations at the Savannah Nickel Project, the majority of around 140 Panoramic staff on-site will be stood down and, unfortunately, made redundant, with some experiencing immediate effects.
Employees with unpaid accrued entitlements are creditors in a voluntary administration of a company, with certain statutory priority entitlements ranking above the claims of unsecured creditors.
Employees may also be entitled to make a claim against the Commonwealth Fair Entitlements Guarantee (FEG) scheme in the event of a shortfall in distributable funds available to meet certain of their entitlements, depending on the outcome of the administration process.
An update in this regard will be provided by the administrators in due course.
“While it was our intention to continue trading on the Savannah Nickel Project and preserve the employment of the operating team as we explored opportunities for a sale or recapitalization of Panoramic’s business, after consultation with major creditors and key suppliers, it is apparent that the prospect of achieving a near-term turnaround of operations and finances is low,” Administrator Daniel Woodhouse said in the statement to the ASX.
“The administrators, with assistance from Treadstone Resource Partners, will continue a dual-track strategy to sell or recapitalize the Panoramic business.
“This process will continue regardless of the Savannah Nickel Project’s operating status and will seek to realize the full value of the defined ore bodies, extensive infrastructure, and exploration potential of the project,” the statement concluded.