The company released its fourth quarter and annual 2016 production results from its two wholly owned Mexican silver mining operations: the Guanajuato mine complex, which includes the San Ignacio mine, and the Topia mine in Durango.
For 2017, the company expects a production level of 4.0 to 4.1mln Ag eq oz (at a 70:1 ratio) from its Mexico operations.
An updated NI 43-101 resource estimate for the Guanajuato Mine Complex will be released later this month, however, due to necessary cut-off dates, recent high-grade drill results will not be included in this estimate. Commissioning of the new tailings storage facility at Topia and resumption of milling is expected in the first quarter, with the gradual processing of ore stockpiled during the shutdown to be conducted through the balance of the year.
Completion of the recently announced acquisition of the Coricancha Mine in Peru is anticipated to take place before the end of the first quarter. Initial activities will include evaluations of current mine and processing infrastructure, underground drilling, and initiation of a Preliminary Economic Assessment.
The Peruvian acqsition could add 75% to output.
Depending on the outcome of the latter, development in support of operations is expected to commence in early- to mid-2018. A resource update is also scheduled for the second quarter of 2017.
2016 Production Highlights (compared to Full Year 2015)
- Consolidated metal production decreased 7% to 3,884,960 silver equivalent ounces ("Ag eq oz")
- Silver production decreased 14% to 2,047,260 silver ounces ("Ag oz")
- Gold production increased 2% to 22,238 gold ounces ("Au oz"), an annual record
- Ore processed was steady at 376,739 tonnes
Fourth Quarter 2016 Production Highlights (Compared to Fourth Quarter 2015)
- Consolidated metal production decreased 12% to 883,772 Ag eq oz
- Silver production decreased 17% to 460,571 Ag oz
- Gold production decreased 8% to 5,206 Au oz
- Ore processed decreased 2%, with 92,869 tonnes milled
"Metal production was down for the fourth quarter and 2016 due to lower grades at San Ignacio and to shutdowns at Topia, with the most recent to accommodate tailings expansion and plant improvements," stated Robert Archer, President & CEO.
"The increased output from San Ignacio did result in a second consecutive annual record for gold production, and recent preliminary drill results from San Ignacio indicate that grades are likely to improve as we continue to the southeast. In addition, with the upgrades at Topia and the recently signed agreement to purchase the Coricancha Mine in Peru, we expect 2017 to be a very exciting time for Great Panther Silver as we position ourselves for production growth in future years."
Guanajuato Mine Complex
Total metal production for the GMC during the fourth quarter of 2016 decreased by 7%, to 702,351 Ag eq oz, compared to Q4 2015, and decreased by 3% to 2,987,074 Ag eq oz for 2016, compared to the prior year. The decreases in both periods were primarily attributed to lower silver grades at San Ignacio. Ore processed in 2016 increased by 4%, which partly offset the lower silver grades. San Ignacio accounted for 58% of the total ore processed at the GMC in 2016, compared to 48% in 2015.
Underground drilling to improve the resource definition at San Ignacio continued through the fourth quarter of 2016, and is scheduled to extend into 2017. In addition, recent surface drilling at San Ignacio was successful in extending the strike extent of silver-gold mineralization for several hundred metres to the southeast of current workings. Seventeen holes, for a total of 3,766 metres, were drilled in the fourth quarter and many holes intersected silver-gold mineralization with higher grades than currently being mined. These results are being compiled and will be released in due course. Surface drilling has resumed to follow up on these encouraging results.
Total metal production in the fourth quarter of 2016 at Topia was 181,421 Ag eq oz, a decrease of 28% compared to the fourth quarter of 2015. When compared to the previous full year, total metal production in 2016 decreased by 17% to 897,886 Ag eq oz. The decrease was mainly attributed to the lower tonnes milled, reflecting the two temporary plant shutdowns during Q3 2016 and a planned three-month processing suspension commencing in December 2016 to facilitate mill upgrades and the transition to a new tailings storage facility.
Mining has continued through the plant shut down and ore is being stockpiled at the site. This material will be processed once the plant starts up again such that production at Topia for 2017 should comprise 13 months of mined ore. Updates on the plant status will be provided as work progresses, with the expected restart in the first quarter of 2017.
For the reported periods of 2016, the Company delivered reductions in cash cost and All-In Sustaining Costs ("AISC") of 60% and 31% respectively. For 2017, the Company expects cash cost to increase due to increases in site costs and increased expenditures on definition drilling aimed at reducing grade variability and improving mine planning. AISC is also expected to increase due to the increase in cash cost and greater investment in drilling, development and capital projects. In particular, AISC will reflect the non-recurring capital expenditures in the new tailings facility at Topia which will primarily be incurred in the first quarter of 2017. Based on current plans and projections, the Company's cash cost and AISC guidance for 2017 is US$5.00 - 6.00 and US$14.00 - 16.00, respectively.