Great Panther Silver Ltd (NYSEMKT:GPL, TSE:GPR) shares rose more than 5% on Thursday after its overnight release of third quarter earnings which turned in net income of $2.13mln in the three months to September 30, reversing a loss of $2.565mln in the same period a year ago.
The company also announced that it commenced reporting its financial results in US dollars as of the third quarter of 2016 and all historical data has been restated in US dollars using the July 1 exchange rate.
During the third quarter of 2016, the company generated $7.2mln in mine operating earnings before non-cash items and $4.2mln in operating cash flows before changes in non-cash net working capital, which represent year-on-year increases of 64% and 254% respectively.
Strong operating results
These strong operating results were primarily attributable to a 22% increase in revenue, or $2.8mln, and a slight decrease in cost of sales. As well as reporting a net income of $2.1mln for the third quarter the adjusted EBITDA increased by 197% to $4.7mln.
Cash and cash equivalents increased by $39.2mln from the start of the year to $52.9mln at Sept. 30, and net working capital increased by $42.8mln to $68.2mln. The increases in cash and net working capital are largely a function of the $29.9mln bought-deal offering that was completed in July, significantly improved cash flows from operating activities and other financing activities.
The 22% revenue increase was primarily attributable to the increase in precious metal prices, as the average realised silver and gold prices for the quarter increased to $19.65 per ounce and $1,326 per ounce, from $13.98 per ounce and $1,069 per ounce respectively.
Positive impact of metal prices
The positive impact of metal prices contributed an estimated $4.1mln increase in revenue. In addition, smelting and refining charges, which are netted against revenue, were $200,000 lower than in the third quarter of 2015.
These positive factors were partly offset by a 7% decrease in metal sales volumes, which had an estimated effect of reducing revenue by $1.2mln, relative to the third quarter of 2015.
The lower metal sales volume was predominantly the result of the lower gold grades at the Guanajuato mine complex, as well as a decrease in production at the Topia mine, due to two temporary shutdowns of operations during the quarter. The company sold 864,605 AgEq ounces during the third quarter of 2016, compared with 931,198 during the same period in 2016, a reduction of 7%.
"Great Panther's third quarter mine operating earnings, operating cash flow and net income all showed significant increases over the third quarter of 2015, reflecting improved metal prices and favourable foreign exchange rates," said Robert Archer, president and chief executive officer.
"In addition, we have seen a significant increase in operating cash flow on a year-to-date basis that, along with the completion of a $29.9-million bought-deal financing in July, has contributed to a significant strengthening of our balance sheet. The company also continues to be debt free."
Great Panther shares were up 5.1% at $1.44 in New York on Thursday.