Great Panther gets rid of concentrate inventory backlog at Guanajuato, expects higher production in 2012

Great Panther Silver (TSE:GPR) (AMEX:GPL) said Thursday it has finalized arrangements to sell all available concentrate inventories from its Guanajuato mine in Mexico before year-end, ensuring strong fourth quarter revenues. 

The company also said it is at an advanced stage in securing new contracts for fiscal 2012 concentrate sales for both its Guanajuato and Topia mines in Mexico.

Precious metal rich lead and zinc concentrates from Topia are typically sold to traders, destined for the Asian smelting market, whereas precious metal rich concentrates from Guanajuato are typically sold directly to smelters, Great Panther said.

"We congratulate our marketing team for successfully restoring the concentrate inventory at Guanajuato to normal levels and we are pleased that there appears to be a healthy market for our anticipated 2012 production", said president and CEO Robert Archer.

In the second quarter, delays in shipments of concentrate from the Guanajuato operation led to an eight percent drop in revenues, but today's news for the sale of all available concentrate inventories before year-end is expected to balance out the previous revenue shortfall.

Looking forward to next year, the company expects metal production growth of approximately 20 percent year-on-year from its two wholly owned Mexican silver operations, with anticipated metal production in the range of 2.50 to 2.75 million silver equivalent ounces for fiscal 2012.

This includes between 1.72 to 1.90 million ounces of silver, 10,000 to 11,000 ounces of gold, 2.5 to 2.8 million pounds of lead, and 3.30 to 3.60 million pounds of zinc.

These estimates compare to 1.51 million ounces of silver in 2011, 7,800 ounces of gold, 2.0 million pounds of lead, and 2.9 million pounds of zinc.

"We are finalizing our budgets for significant capital and exploration expenditures for 2012 to ensure we meet our growth projections at both operations," continued Archer.

"However, considering the extreme grade variability we have experienced this past year, particularly at Guanajuato, we feel that it is prudent to provide for a fairly conservative range of production outcomes for 2012, even though we will be striving to achieve a higher output."

With regards to production, the company said operations are on track to achieve its fourth quarter target of 0.55 million silver equivalent ounces.

Ore grades processed at the Guanajuato Mine Complex in November averaged 220 grams per tonne (g/t) of silver and 1.78 g/t gold, up significantly from the grades of 175 g/t silver and 1.12 g/t gold, in the third quarter.

The higher grades are a result of high grade ore from the development of the Deep Cata Alto zones, which started to be processed towards the end of October, and made an immediate impact, the company said.

This development has continued through December and, as stoping is established, ore grades are expected to remain strong throughout 2012, Great Panther predicted.

"Ore throughput is estimated to increase to 200,000 tonnes in 2012, from 170,000 tonnes in 2011, due to planned expansions of output at the Guanajuatito and Santa Margarita zones," the company said in a statement. 

At Guanajuatito, part of the Guanajuato Mine Complex, the new 160 metre level is being developed and the decline access ramp will be extended to the 200 and 240 metre levels during 2012.

Development on the 455 metre level at Santa Margarita is also underway and this will be followed by access to the 475 metre level to facilitate the production increase from these gold-rich veins.

The plant capacity, currently at 1,050 tonnes per day, is "more than sufficient" to handle this expansion, the company said, and further improvements in metallurgical performance are anticipated.

At the Topia mine, ore grades are expected to be similar to 2011 as the expansion of the 15 small mines continues, with an anticipated boost in throughput to 58,000 tonnes, up from 47,000 tonnes in 2011.

Improvements to the processing plant through the next two quarters is forecast to further increase capacity to approximately 300 tonnes per day at Topia.