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Noble Capital upgrades Great Panther Mining to Outperform on 'improving risk and reward profile'

Analyst Mark Reichman noted that Great Panther's Tucano mine in Brazil performed better than expected in 4Q 2019

Great Panther Mining Limited - Noble Capital Markets upgrades its investment rating on Great Panther Mining Limited to Outperfrom from Market Perform
The analyst says operational issues at the Tucano mine will not negatively affect the company's long-term production profile

Noble Capital Markets has upgraded its investment rating on Great Panther Mining Limited (NYSEAMERICAN:GPL) (TSE:GPR) to Outperform based on “an improving risk and reward profile.” 

In a note to investors, analyst Mark Reichman pointed out that Great Panther’s fourth-quarter production increased 275.7% to 44,697 gold equivalent ounces versus the prior-year period and decreased 5.7% compared to the third quarter of 2019. The increase in gold production reflects the acquisition of the Tucano Gold Mine in Brazil in March 2019.  

He also said 4Q gold production from the Tucano mine exceeded the recent guidance range of 31,000 to 33,000 ounces with the production of 34,181 ounces. 

READ: Great Panther Mining revises 4Q production guidance for Tucano gold mine

“Management has moved swiftly to strengthen its management team with key appointments across several functional areas, including operations, finance and administration,” Reichman wrote. 

“The Tucano mine performed better than expected in the fourth quarter of 2019 and management is moving quickly to de-risk Tucano and position the mine for improving performance.” 

In 2019, Great Panther produced 146,853 gold equivalent ounces - above the midpoint of management's guidance range of 142,000 to 149,000 ounces. In addition to the Tucano mine's strong finish to the year, the Topia mine In Mexico experienced higher year-over-year production as a result of increased mill capacity and improved grades.

“We forecast a 2019 loss per share of ($0.11) and EBITDA of $18.8 million compared to our prior estimates of ($0.10) and $20.1 million, respectively,” said Reichman, whose firm had Great Panther at Market Perform.  

“The revision reflects, in part, increased fourth-quarter expenses. Based on an improving production and cost profile, we forecast 2020 EPS and EBITDA of $0.05 and $69.7 million, respectively.”

He added that recent operational issues at the Tucano mine will not negatively affect the company's long-term production profile.

“While Tucano's production potential won't be evident until the latter half of 2020, we think the depressed valuation offers investors an attractive entry point,” he said. 

Great Panther’s stock recently traded up 2.9% to C$0.70 in Toronto and rose 6% to US$0.55 a share in New York.  

Contact the author: [email protected]

Follow him on Twitter @PatrickMGraham

Quick facts: Great Panther Mining Limited

Price: 1.06 CAD

TSX:GPR
Market: TSX
Market Cap: $374.27 m
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