You can make your panel a circle with the following command:
procedure MakePanelCircle(MyPanel: TPanel; Diameter: integer);
var
region1 : hrgn;
begin
region1 := CreateRoundRectRgn(0, 0, Diameter, Diameter, Diameter, Diameter);
SetWindowRgn(MyPanel.Handle, region1, True);
end;
Look at the documentation of CreateRoundRectRgn because it's normally used to create a rectangle with rounded edges. If you dig a bit further you'll find a guide to make a region based upon your bitmap.
If you look at the following example Shaping a Form around a Bitmap
you will learn how to make a region from a bitmap.