viewGreat Panther Mining Limited

Great Panther Mining, the gold producer, poised for strong 2020 as it continues to advance Brazilian and Mexico mines


The company was formerly known as Great Panther Silver Ltd but now that it generates mainly gold, the name was changed

Great Panther Mining Limited -

Quick facts: Great Panther Mining Limited

Price: 0.67 CAD

Market: TSX
Market Cap: $236.27 m
  • Successfully operated in Mexico for over 13 years

  • Improving operations and cashflow at Tucano gold mine in Brazil

  • Large resource and reserve base

What Great Panther does:

Great Panther Mining Ltd (TSE:GPR) (NYSEAmerican:GPL) became a new intermediate precious metals producer with its acquisition in March last year of Beadell Resources and its Tucano gold mine in Brazil.

Formerly, the company was known as Great Panther Silver Ltd but now that it generates mainly gold (83% of production, having been under 50% previously) the name was changed. The group's market cap is over US$175 million.

Tucano is currently the second-largest gold producer in Brazil, generating around 150,000 ounces per year from several open pits, and is sitting on a multi-million ounce deposit. The deal turned the company into a 200,000 gold-equivalent ounce per year producer.

Great Panther operates three mines including the Tucano gold mine in Amapá State, Brazil, and two mainly silver mines in Mexico.

These Mexican assets are the Guanajuato mine complex - consisting of two mines Guanajuato and San Ignacio, and the Topia mine.

The company also owns the Coricancha mine in Peru where last year it executed a successful bulk sample mining program in accordance with a 2018 preliminary economic assessment (PEA).

Great Panther is establishing the conditions, under which a restart at the mine could be implemented.

A preliminary economic assessment (PEA)  has shown robust numbers and low capital costs at the mine. Using base case gold at US$1,300 per ounce and silver at US$16.50 an ounce, Great Panther said Coricancha was estimated to generate an after-tax net present value of US$16.6 million and an after-tax internal rate of return of 81%.

How's the company doing:

The addition of Tucano has been keenly felt in Great Panther's numbers.

Last October, the metals producer posted a C$59.3 million increase in revenue in its third quarter, thanks to the addition. Revenue for the three months to end September was C$71 million, compared to C$11.6 million in the same quarter a year ago, with Tucano accounting for C$58.2 million of that figure.

Jeffrey Mason, the group's newly appointed interim president and CEO, after the departure of chief executive James Bannantine, said Tucano had "driven a significant increase" in mine operating earnings and operating cash-flow over the third quarter.

Meanwhile, Great Panther's fourth-quarter production (to end December last year) increased 275.7% to 44,697 gold equivalent ounces versus the prior-year period and decreased 5.7% compared to the third quarter of 2019, reflecting again the acquisition of Tucano.

In November, the company boosted senior management with the appointment of a new vice president (VP) of exploration and VP of people and culture, namely geologist Alan Hitchborn and Lucie Gagnon respectively.

And earlier this year, analysts at Noble Capital Markets said they were looking forward to a strong 2020 from Great Panther after it boosted its coffers with the announcement of two pre-payment deals for gold and silver production from its mines, worth over US$21 million.

There was a US$11.25 million gold doré prepayment agreement with a Samsung subsidiary, which came hot on the heels of an offtake deal with IXM Group worth US$10 million.

During 2020, Great Panther has said it plans to drill a total of at least 25,000 metres across its San Ignacio, Guanajuato and Topia mines at a cost of C$4 million, focusing on defining mineralization and testing new targets to develop new high-grade resources.

Last year, Topia achieved a new record for annual production at 1.8 million silver equivalent ounces due to increased mill capacity, grade and the advancing development of various mines in the Topia area.

What the broker says:

Noble Capital Markets upgraded its rating on Great Panther Mining to 'Outperform' in January based on “an improving risk and reward profile".

Analyst Mark Reichman said 4Q gold production from Tucano had exceeded the recent guidance range of 31,000 to 33,000 ounces with production of 34,181 ounces.

In 2019, Great Panther produced 146,853 gold equivalent ounces - above the midpoint of management's guidance range of 142,000 to 149,000 ounces. In addition to the Tucano mine's strong finish to the year, the Topia mine In Mexico experienced higher year-over-year production as a result of increased mill capacity and improved grades, the broker said.

“Management has moved swiftly to strengthen its management team with key appointments across several functional areas, including operations, finance and administration,” said the analyst.

Reichman also noted his view that recent operational issues at the Tucano mine would not negatively affect the company's long-term production profile.

Broker Roth Capital also lifted its price target on the shares in January to US$1.00 a share from US$0.80 previously and repeated a 'Buy' stance.

Analyst Jake Sekelsky said the group now had the 'necessary working' capital to move forward with the technical review at the Tucano gold mine in Brazil aimed at bringing the project's UCS pit back into production in 2021.

Output from the Urucum Central South pit (UCS) was suspended last October due to a technical issue, while production was accelerated from the Urucum North and Urucum South pits.

Last year, the group, across its mines produced146,853 gold equivalent ounces, which topped Roth's estimate of just under 140,000 ounces.

What the boss says:

"Our 2019 exploration program in Mexico was highly successful at both of our mining operations," said Jeffrey Mason, Great Panther's interim president and CEO in the last statement.

"In 2020, we plan to define new mineralized zones and test new targets at San Ignacio, and focus on developing new high-grade resources at Guanajuato with 63 per cent more drilling metres, targeting increased production later this year. With comprehensive exploration plans of over $4-million in Mexico, our 2020 programs will build on momentum from our 2019 successes."

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