Sign up USA
Proactive Investors - Run By Investors For Investors

Great Panther Silver embarking on new phase of expansion and growth, supported by solid suite of Mexican assets

Great Panther's solid operating cashflow set to provide platform for significant growth
Great Panther Silver embarking on new phase of expansion and growth, supported by solid suite of Mexican assets
Silver pour at Guanajuato

Expect plenty of action from Great Panther Silver (TSE:GPR) in the coming months.

New chief executive James Bannantine is now beginning to get his feet under the desk, and used to the idea that he has a company with two producing mines, one potential mine, and enough cash in the bank to buy at least one more project outright, before the option of issuing paper has even crossed anyone’s mind.

READ: Great Panther Silver says it delivered on all production targets and made significant investments in 2017

Indeed, it’s an enviable position.

Great Panther’s Guanajuato and Topia mines in Mexico both have long-established track records of production. In the most recent set of financials, for the year to 31 Dec 2017, they accounted for US$64mln of revenue and mine operating earnings before non-cash items of US$22mln.

All-in sustaining costs are running at US$14.72 per ounce of silver equivalent, allowing for decent enough margin at today’s prevailing silver price of well over US$16.00, and quarter-on-quarter costs are on a downward trajectory.

But as he sits down to begin a short presentation to a select gathering of interested fund managers in London, Bannantine’s opening remarks set the tone for what is to follow.

“I think Great Panther should be bigger,” he says.

“That’s why I’m here. We have positive net income and positive cashflow as a foundation, and there’s value in the existing operations with nothing new added.”

But an addition has already been lined up. Last year, Great Panther finalised the acquisition of the previously-worked Coricancha project in Peru, and putting this into production will be one of Bannantine’s key priorities.

The potential returns are significant. Great Panther picked this project up from Nyrstar for US$100,000, securing as part of the transaction a closure bond from Nyrstar to cover any potential environmental costs if the project doesn’t go ahead.

“We’re optimistic on the potential of this mine,” says Bannantine. “The key is to generate enough ore feed to the plant. Our plan is to expand the number of working faces on the mine.”

It’s an operation that will require considerable skill.

“It’s a 60cm vein,” explains Bannantine. “So it’s very narrow. It needs to be mined carefully. But we have a definite plan for that in a design that will be published in April or May in an updated feasibility study.”

Overall, the idea is that Coricancha will add around 3mln ounces of silver production to the existing 4mln ounces that comes out of Guanajuato and Topia per year.

It will be a significant forward bound, but don’t expect the growth to stop there.

Great Panther is currently sitting on a cash pile of around US$60mln, with no debt spike the strength of that firepower.

“We intend to use this money to acquire another project,” says Bannantine.

READ: Great Panther Silver unveils near doubling of estimate of mineral resources at Guanajuato

Precisely when or where isn’t yet clear, but the preferred locations for any target are Mexico, Peru, Brazil and Colombia, in that order. The ideal project would either be silver or gold, and would be in the later stages of development - “something that’s either operating or needs fixing,” says Bannantine.

Interest in such a deal when it’s finally put together is likely to be significant. There’s a general consensus that the mining markets are now on the turn, although Bannantine, as a former private equity fund manager himself, notes that there has been no general switch into mining quite yet.

If it’s underway by the time Great Panther inks its deal, then there could be significant potential for a real boost to the share price.

And that’s not the only upside. More immediate perhaps is the potential benefit from improved metals prices. Gold and silver have already both demonstrated a propensity to new strength this year, and if the dollar stays weak and metals prices soar, the read-across to Great Panther will be significant.

“In silver,” explains Bannantine, “if the price goes up 20%, your stock price can go up by 80% because margin goes up by 80%.”

That’s the benefit of a fixed-cost base, and the proof can be found straightforwardly enough in Great Panther’s own share price, which rose significantly at the beginning of 2016, when silver took its first run towards US$20.00 in a couple of years.

This is a company with strength in depth, and a bright future ahead of it.

View full GPR profile View Profile

Great Panther Silver Ltd Timeline

Related Articles

September 11 2018
Its Guanajuato and Topia mines in Mexico both have long-established track records of production

No investment advice

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You understand that the Company receives either monetary or securities compensation for our services. We stand to benefit from any volume this write-up may generate.

You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

Copyright ©, 2018. All Rights Reserved - Proactive Investors North America Inc., Proactive Investors LLC

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use