Panoramic Resources has reached an agreement to divest its Lanfranchi nickel project and related infrastructure located in Western Australia (WA) to a 100% owned subsidiary of US-based private equity firm Black Mountain Metals.
The deal will be executed through the acquisition of all the issued shares in Panoramic’s wholly-owned subsidiary Cherish Metals, which owns 100% interest in the Lanfranchi nickel project.
Panoramic acquired the project in 2005 and placed it into care and maintenance in 2015.
The company is selling the project to shift focus to the restart of the Savannah Ni-Cu-Co project, which is on track to produce concentrate in the March 2019 quarter.
The proceeds from the sale will be used to fund additional exploration at Savannah to extend the mine life, general working capital, and to explore other opportunities.
Under the terms of the agreement, Black Mountain will make an aggregate payment of A$15.1m ($10.85m).
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Of the total consideration, the company will pay an initial amount of A$1.51m ($1.08m), followed by A$11.99m ($8.62m) upon closure of the transaction, and the remaining A$1.6m ($1.15m) in instalments.
Panoramic Resources managing director Peter Harold said: “Whilst 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.
“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.
“With the Savannah Project development fully funded, the sale proceeds from Lanfranchi will strengthen our balance sheet, placing the company on a sound footing as we ramp up to full production from the new Savannah North orebody as well as providing flexibility to fund regional exploration activities and other growth initiatives.”
Subject to regulatory approvals and other conditions, the transaction is anticipated to be closed during the December quarter of this year.