IGO has extensive underground nickel mining experience from its 16 year operatorship of Long9 and successful development and operation of Nova, which will be leveraged to maximise value from Savannah.
IGO has a team of over 90 technical staff dedicated to exploration and, importantly for maximising the value of Savannah and its surrounding tenure, IGO’s exploration team includes internationally recognised nickel sulphide experts. This knowledge and experience is, in IGO’s opinion, likely to bring new energy and focus to understanding and maximising the value of Panoramic’s tenements around Savannah to your benefit as a future IGO shareholder.
As demonstrated below, Panoramic has been unable to consistently grow investment in organic growth initiatives. By comparison, IGO has consistently deployed capital into exploration and growth and, as demonstrated by an enlarged FY20 budget, continues to do so.
Source: IGO ASX announcements and Panoramic ASX announcements 11
In addition, IGO’s net cash position of $264 million at 30 September 2019 and low gross gearing of 2%12 place it in a very strong position to easily fund capital and growth at Savannah without the overhang and risk associated with the Savannah Financing Agreement.
As a result of IGO’s conviction in the potential of the regional geology, IGO has pegged over 6,000km2 of exploration tenure around Savannah as presented on the map on the following page.
If IGO acquires 100% of Panoramic through the Offer, IGO intends to undertake a comprehensive strategic review of Panoramic’s assets in order to optimise value and assess the potential for step-change initiatives. If IGO acquires control of Panoramic, but is not entitled to proceed to compulsory acquisition, IGO intends to propose to the Panoramic Board that a similar review be conducted.
IGO tenure around Savannah
By ACCEPTING IGO's Offer, you will have an opportunity to participate in the realisation of the full value potential from Savannah and its surrounding geology through IGO's technical, financial and operating capability than on a standalone Panoramic basis.
9. The Long operation was sold by IGO, effective 31 May 2019.
10. IGO expenditure reflects underlying free cash flow for exploration activities and excludes evaluation expenditure. Panoramic expenditure represents exploration and evaluation expenditure recognised on the consolidated income statement and exploration and evaluation expenditure classified as a cash flow from investing activities.
11. IGO FY17: underlying free cash flow for new business per June 2017 Quarterly Activities Report, page 16 (IGO ASX announcement 26 July 2017), adjusted for $3.7 million of evaluation expenditure; IGO FY18: underlying free cash flow for new business per June 2018 Quarterly Activities Report, page 18 (IGO ASX announcement 27 July 2018), adjusted for $4.4 million of evaluation expenditure; IGO FY19: underlying free cash flow for exploration per June 2019 Quarterly Activities Report, page 19 (IGO ASX announcement 31 July 2019); IGO FY20 guidance: per FY19 Financial Results, page 3 (IGO ASX announcement 29 August 2019); Panoramic FY19 and FY18: Panoramic 2019 Annual Report (PAN ASX announcement 18 October 2019), Panoramic FY17: Panoramic 2018 Annual Report (PAN ASX announcement 17 October 2018). On 14 November 2019, after the date of lodgement of the original Bidder’s Statement with ASIC, Panoramic announced that its FY20 production guidance (as announced to the market on 3 September 2019) would not be met and that revised production guidance would be released to the market upon completion of an operational review which Panoramic said it anticipates will be complete within 3 weeks of the 14 November 2019 announcement (ie by 5 December 2019).
12. Gross gearing is calculated as total debt as at 30 September 2019 divided by market capitalisation as at 1 November 2019 (being the market value of equity).