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Great Panther’s Savvy Coricancha Acquisition Provides ‘Substantial Upside’

Thursday, January 5, 2017 12:04
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(Before It's News)

The deal Great Panther announced last month to acquire Coricancha in Peru from Nyrstar is getting high marks from one analyst.

Great Panther Silver Ltd. (GPR:TSX; GPL:NYSE.MKT) announced on Dec. 20 that it had reached an agreement with Nyrstar (NYR:BSE) to acquire the Coricancha gold-silver-lead-zinc-copper mine and mill complex (CMC) in Peru. According to the company, the purchase price comprises “(i) US$0.1 million to be paid on closing, (ii) an amount equal to cash on hand in Coricancha at completion, and (iii) earn-out consideration of up to US$10.0 million. Under the earn-out, Nyrstar will be paid 15% of the free cash-flow generated by the CMC during the 5-year period after which the CMC is cumulative free cash-flow positive from closing.”

Heiko Ihle, an analyst with Rodman & Renshaw, noted in a Dec. 21 company update that “this transaction presents Great Panther with substantial upside, as management believes Coricancha could produce 3.0 million silver equivalent ounces per annum, while limiting downside due to the structure of the transaction.” He added that Great Panther “should benefit from Coricancha’s past producing nature (as recently as 2013) and corresponding infrastructure present at the site. . .management estimates that the project could be brought back into production for approximately $25.0 million, which is already fully funded.”

Ihle indicated support by stating that “we applaud management’s diligence with respect to acquiring assets,” adding that “Great Panther’s management team has remained steadfast in its commitment towards acquiring the right assets at the right price.” He also stressed that “we are supporters of the new agreement as just $0.1 million in upfront capital is expected to be paid with no additional payments made to Nystar until initial capital costs are recouped and the mine is FCF positive.”

Great Panther’s President and CEO Robert Archer stated, “We are very excited about the prospects for the Coricancha Mine. . .the project has the potential for annual production of approximately 3 million silver equivalent ounces, which would be a significant contribution to our growth. Importantly, with more than US$54 million in cash, the Company is fully financed to bring the mine back into production.”

Rodman & Renshaw sees the Coricancha acquisition as “a low-risk way to significantly add to Great Panther’s consolidated production profile. Moreover, we like that the firm is evaluating assets outside of Mexico in order to add a touch of jurisdictional diversity to its portfolio of operating assets and expect the evaluation of additional assets for acquisition to continue despite the Coricancha purchase agreement,” Ihle stated.

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Disclosure:
1) Patrice Fusillo compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. She owns, or members of her immediate household or family own, shares of the following companies mentioned in this article: None. She is, or members of her immediate household or family are, paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are sponsors of Streetwise Reports: Great Panther Silver Ltd. The companies mentioned in this article were not involved in any aspect of the article preparation. Streetwise Reports does not accept stock in exchange for its services. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview or article until after it publishes.

Additional Disclosures for this Content

( Companies Mentioned: GPR:TSX; GPL:NYSE.MKT, )



Source: https://www.streetwisereports.com/pub/na/17233

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