Judge rejects bid to relieve VAs of $20 million

With $20 million residing in an administration bank account you can bet the receivers who this week were told they have no right to put their paws in the pot will have their lawyers poring over the judgment of Federal Court judge Michael Feutrill in the matter of Woodhouse, in the matter of Panoramic Resources Limited [2024] FCA 449.

ASX-listed Panoramic Resources owns Savannah Nickel Mines Pty Ltd (SNM), which operates the Savannah nickel, copper and cobalt mine and processing operation in Western Australia’s Kimberley Region.

“on either of Trafigura’s constructions, Panoramic would not have any express right to use ‘money’ received from the equity raising in the ordinary course of its business. As a consequence, that ‘money’ would be treated differently from dividends or other distributions received from Savannah and the ability of Panoramic to use it in the ordinary course of its business would be uncertain and doubtful under the provisions of the PPSA and depend on the circumstances in which it was received or used.” Justice Michael Feutrill.

SNM’s operations were undertaken with financial assistance from both its parent and its primary off take partner Trafigura Pte Ltd, a Singaporean-domiciled subsidiary of Swiss-based energy and base metals trader Trafigura.

There are inter company loan agreements between Panoramic and SNM and there are facility agreements between Trafigura Pte Ltd and SNM guaranteed by Panoramic and SNM subsidiary PAN Transport Pty Ltd.

Trafigura Pte Ltd’s interests under the facility agreement are secured by both a General Security agreement (GSA) in respect of obligations owed by SNM and PAN Transport as guarantors and by a Special Security Deed (SSD) securing Panoramic’s obligations as guarantor.

And it’s the terms of the SSD that provided Trafigura and with what it must’ve thought was an opportunity to relieve Panoramic’s administrators – appointed late last year – of $20 million, at least until Wednesday when Justice Feutrill ruled that the funds – raised by Panoramic from investors in the middle of 2023 – couldn’t be claimed by the receivers Trafigura installed based on their contention that all the funds raised became part of the property secured under the SSD.

The stoush comes after the Savannah operation hit problems in early 2023 due to prolonged rainfall and the failure of a critical piece of processing infrastructure at the mine site.

Those problems translated into an estimated $20 million hole in Panoramic’s working capital forecast, which led to the company’s $40 million capital raise in July and the realisation by October that it wouldn’t be enough, hence the appointment of FTI Consulting’s Dan Woodhouse, Hayden White and Kathryn Warwick as VAs on December 14, 2023.

Trafigura took some time to consider its position and then appointed Cor Cordis WA partners Jeremy Nipps and Tom Birch as receivers on March 7.

Four days later the VAs filed an originating process in the Federal Court seeking to have the question of whether the SSD meant the receivers were entitled to the $20 million resolved.

On Wednesday the judge made no order as to costs but given the complexity of the arguments around what was meant by the wording of the SSD an appeal can’t be ruled out yet.