The West

Panoramic joins cost-cutting brigade
Panoramic joins cost-cutting brigade

WA nickel producer Panoramic Resources has joined the increasing list of resources companies cutting costs, revealing it has started measures to find up to $15 million in annual savings from its business.

In its quarterly report released yesterday the company, which has nickel operations in the Kimberley and Kambalda in the Goldfields, said the cost-cutting initiatives included a reduction in the number of consultants and contractors used across its operations, a reduction in corporate travel and a prioritisation of exploration expenditure.

Speaking from northern Ontario, Canada, Panoramic managing director Peter Harold said the cost savings were a response to the current nickel price, which was lower than what they had forecast.

The nickel price hit a three-year low of $15,250 a tonne midway through the quarter.

It climbed back to $US18,730 a tonne on October 1 before dropping steadily back down to $16,950/t yesterday.

Mr Harold said the company responded during the brief two-month rally, hedging up to 17 per cent of its output to the end of next year. He said they would look to hedge more in the future.

"We have a stated hedging policy and hedge when the opportunity arises in order to maximise margins," he said. "Nickel had rallied over 20 per cent off its lows and we saw an opportunity."

Panoramic produced 4869 tonnes during the quarter and recorded $5 million in free cash flow.

Fellow West Australian nickel producer Western Areas also released its quarterly results yesterday, producing 7504 tonnes of nickel at its Forrestania site, 400km south-east of Perth.

Speaking on the nickel price from Hong Kong where he was in talks with Western Areas' offtake partners, managing director Dan Lougher said he believed the metal's downturn had bottomed out.

"We think it's going to slowly climb back . . . but the demand worldwide is a little bit sluggish at the moment, so it's taking a bit longer to turn around," he said.

"But what I'm hearing is that there're signs of recovery - we've been through the worst of it."

Mr Lougher said the company's small amount of hedging was a defensive strategy and they preferred to play the nickel price as it came through.

He said the company's share price, which has been on a steady recovery over the past three months, was leveraged on the fluctuating nickel price.

"It's a tough market out there, and we're not that loved at the moment," he said.

"Hopefully the market sees that we are leveraged to the nickel price, I mean every time it picks up we make more money."

Western Areas finished down 8¢ at $4.57. Panoramic lost 3¢ to finish at 63.5¢.

The West Australian

Latest News From The West

Popular videos

Our Picks

Follow Us

More from The West