Great Panther Mining Ltd (TSE:GPR) (NYSEAMERICAN:GPL), the intermediate intermediate precious metals producer, offers investors favorable growth and leverage to the firming gold price, according to analysts at Noble Capital, who have raised estimates for the company.
In their latest note, the brokerage's analyst also reiterated an 'outperform' rating on Great Panther stock with a target price of US$1.75 per share - more than double where they are now at US$0.71.
READ: Great Panther Mining hails Tucano gold mine advances as it becomes new large Latin American metals producer
The Noble analysts noted that, in 2019, the firm's newly acquired Tucano mine in Brazil is expected to produce between 125,000 and 135,000 gold equivalent ounces, while its operations in Mexico - Guanajuato and San Ignacio - are expected to generate between 46,000 and 50,000 gold equivalent ounces.
The firm has also decided to restart production at the gold-silver-copper-lead-zinc Coricancha mine in Peru, which had been on care and maintenance, they pointed out.
"While the company has laid out its production guidance for 2019, we think a full year's production at Tucano, resumption of production at the Guanajuato mine in 2020, the potential mid-year 2020 restart of Coricancha and completion of the plant expansion at Topia in the first quarter of 2020 all support a favorable growth outlook in 2020 and beyond," the Noble analysts said.
In the second half, the Tucano mine is expected to produce between 35,600 and 38,600 gold equivalent ounces during the third quarter and between 55,000 and 59,600 gold equivalent ounces during the fourth. Cash cost per gold ounce sold is expected to be between US$820 and US$890, while all-in sustaining costs, excluding corporate general and administrative costs, is expected to be between US$1,030 and US$1,130.
To reflect rising commodity prices and improved operating margins, the Noble analysts lifted their Great Panther 2019 underlying earnings (EBITDA) estimate US$45.4 million, up from US$36.3 million. Their 2020 EBITDA estimate moved to US$98.9 million from US$88.7 million.
Exploration a key driver
Exploration will be a key driver of value, the Noble analysts pointed out, noting that the firm is undertaking a 35,000-meter drilling program, which should be completed in 2020, at the Tucano mine to upgrade resources and extend the mine life.
"Beyond near-mine drilling at Tucano, management has identified numerous targets outside the area containing current resources and reserves but within trucking distance of the plant that provide significant exploration potential. Additionally, exploration is being conducted at the Guanajuato mine with goal of resuming production in 2020," they concluded.
Shares in New York nudged up 0.28% to $0.71.
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