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Margins and cash flow improve with metal price upswing, says Great Panther

Thursday, March 2, 2017 4:59
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Mexico-focused silver miner Great Panther (TSE:GPR, NYSEMKT:GPL) saw higher revenues in 2016 thanks to a 14% increase in realised sale prices for silver and gold.

The improved  metal prices and significantly lower costs also drove substantial improvements in margins and cash flow in 2016, the miner said, including a $17.6 million increase in mine operating earnings.

President and chief executive Robert Archer told investors: “Improved metal prices, combined with a 20% reduction in our all-in sustaining costs to $10.99, resulted in Great Panther delivering a 404% increase in mine operating earnings in 2016.

“Significantly improved operating cash flow, combined with the proceeds of financings completed in 2016, enabled us to end the year with $67 million in net working capital, no debt, and positions us well to capitalize on growth opportunities such as the recently signed Coricancha acquisition.”

For the year AISC (All in sustaining costs) decreased 20% to $10.99 per payable silver ounce, which was also below guidance, while adjusted underlying earnings (EBITDA) improved to $16.5 million from $7.1 million the year before.

Mine operating earnings before non-cash items increased to $27.7 million, a 51% higher than $18.4 million in 2015, but despite that the firm reported a net loss of $4.1 million for 2016, mainly due to foreign exchange losses of $11.1 million recognized in the first half of the year prior to the group’s conversion to US dollar reporting.   

Silver production decreased 14% to 2,047,260 ounces over the year, while gold production increased 2% to 22,238 ounces , which was an annual record.

Great Panther Silver Ltd has two wholly-owned operating mines in Mexico -  the Guanajuato Mine Complex, which includes the San Ignacio Mine,  - and the Topia Mine in Durango.

It has also recently signed an agreement to acquire a 100% interest in the Coricancha Mine Complex in Peru, which is expected to be finalized in the second quarter.   

The company believes that the Coricancha Mine Complex has the potential for approximately three million silver equivalent ounces of production annually, which would boost its consolidated metal production by about 75%. 

The construction of the Phase II tailings storage facility and related plant upgrades at the Topia Mine are progressing well, and Great Panther expects, as planned, to restart processing before the end of the first quarter.

The costs of the project will be accounted for as sustaining capital expenditures. This, along with the impact of suspended production for a good portion of the quarter, will result in adverse cash cost and AISC metrics for the first quarter, it added.

Great Panther successfully closed the year with $56.6 million in cash and short-term investments, $66.6 million in net working capital and no long-term debt.

Story by ProactiveInvestors


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