Tuesday, 13 March 2012

Great Panther Silver FY profits climb 8%, revenues soar 37%

Great Panther Silver (TSE:GPR)(AMEX:GPL) late Monday posted an increase in 2011 earnings and revenues as precious metals prices continued to soar.
For the year that ended December 31, Great Panther said net earnings increased eight percent to $11.5 million while full-year revenues jumped 37 percent to $57.8 million.
"We are extremely pleased with our growth in revenues and the significant increase in our operating cash flow," said Great Panther's president and chief executive Robert Archer.
"The increase in our profitability and cash flow has enabled us to step up the investment in our properties and in exploration to drive growth in 2012 and beyond."

In a conference call, Archer characterized 2011 as "a year of tremendous volatility" in the precious metals space which Great
Panther intends to take advantage of as part of its goal of becoming a mid-tier silver producer.

Great Panther's Archer said that the company has already secured contracts to sell its 2012 metals output to two smelters directly rather than a metals trader.

He also said that the company was "very focused" on acquisitions, even opening new exploration offices in Peru and Mexico during the past year.

"We have got a number of things that we're looking at quite closely in Mexica and Peru," Archer said.

He added that it was "dificult to put a timeline" on when and where any future acquisition would take place.

At San Ignacio, Archer reckoned the company could produce "early-stage development ore" by the end of this year, with eventual production in 2013.

Great Panther is also working on a new resource estimate for Guanajuato, Archer said, but due to the "extremely complex" ore body at the mine, a material change in the estimate is "not likely".
While the average price of silver for 2011 increased by 74 percent on a year-over-year basis, it has fluctuated significantly in recent years, and it continued to be volatile in 2011 reaching a high of $48.70 in April and a low of $26.16 in December.
Vancouver-headquartered Great Panther Silver is a Mexico-focused silver miner focused on its two wholly-owned operating mines in Mexico - Guanajuato and Topia.
Since commencing operations at these two mines in 2006, Great Panther achieved continuous growth in metal production in excess of 20 percent per year until 2010, when the company achieved record production of 2.3 million silver equivalent ounces.
For 2011, the company produced 2.2 million silver equivalent ounces, down two percent due to lower ore grades which limited metal production, with average revenue per silver ounce at $34.71, up 63 percent.
During the fourth quarter, however, the company saw an improvement in ore grades, and the company expects production to return to its growth trend. In 2012, Great Panther expects to deliver production of 2.5 to 2.75 million silver equivalent ounces, an increase of 14 to 25 percent from 2011.
The company also increased working capital to $53.8 million at December 31, from $18.8 million at the end of 2010.
In the fourth quarter of 2011, the company posted a net loss of $1.4 million, or loss of one cent per share, on revenue which grew 27 percent to $17.5 million.
Earnings in the fourth quarter were hit by non-cash charges that included a deferred income tax expense of $1.9 million, $2.2 million in non-cash share-based payments and $4.6 million in foreign exchange losses which primarily relate to unrealized losses on loans made by the company to its Mexican subsidiary.
Looking ahead, Archer said: "We are very excited about our growth prospects in 2012. The recent development of our Deep Cata and gold-rich Santa Margarita zones at Guanajuato are expected to contribute to higher grades and increased production in 2012.
"In addition, we have a very intensive exploration and development program for San Ignacio which we expect will contribute to production growth in 2013."
During the fourth quarter of 2011, the company saw a marked improvement in grades at Guanajuato through the development of the high grade Deep Cata and gold-rich Santa Margarita ore bodies. Expansion of production from these areas is underway in 2012.
Guanajuato saw a 17 percent increase in mined and processed ore in 2011 to almost 170,000 tonnes, and the plan for 2012 is to increase throughput up to 200,000 tonnes. The plant at Guanajuato has capacity for over 300,000 tonnes per year, Great Panther said.
Ore mined and processed at Topia in 2011 increased by 23 percent to almost 47,000 tonnes. The plan for 2012 includes a further increase of 17 percent to 57,000 tonnes.
Cash costs for 2012 are seen at $10.50 per ounce, compared to 2011's $10.84 per ounce.
The company plans a total of over 45,000 metres of exploration drilling in 2012 to further define resources, look for vein extensions and test new targets.
It also expects to release a resource update for the San Ignacio project in the second quarter of 2012. In October 2011, a NI 43-101 compliant initial mineral resource estimate of 4.5 million silver equivalent ounces was released for San Ignacio, after drilling 24 diamond core holes.
Metres drilled at San Ignacio have more than tripled to date.
San Ignacio is expected to realize its potential during 2012 with an intensive exploration and mine development program being planned, which the company expects will add to production growth in 2013.
The present surface drill program includes a minimum of 9,600 metres of drilling at San Ignacio in 2012.

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