Stonecap Securities has issued a note on Great Panther Silver (TSE:GPR) after the company acquired the El Horcon silver-gold project in Mexico.
The capital markets firm has a "Sector Perform" rating and $2 price target on Great Panther.
Great Panther purchased the project from a private Mexican company for $1.6 million. El Horcon covers 7,908 hectares in 17 contiguous mining concessions and is located 60 km from Great Panther’s Guanajuato Mine Complex, making it a potential future source of feed for the Guanajuato mill.
El Horcon is a past producer, but of unknown magnitude.Exmin Resources drilled 6,500 metres between 2006 and 2009 on the project. Drill hole HOR-07-01 intersected 2.88 grams per tonne (g/t) gold and 61 g/t silver over 3.6 metres which management claims is the most representative hole.
Channel sampling by Exmin returned 80 metres of 1.97 g/t gold and 99 g/t silver and a shallow zone of silver-gold mineralization on the Diamantillo vein will be the focus of a six-month phase one exploration program.
"While possible production from the El Horcon project is a long way off, Great Panther has secured a potential satellite deposit for its Guanajuato Mine Complex at a cheap price," Stonecap Securities analyst Christos Doulis said.
"As we have indicated in previous research, increasing feed for the Guanajuato mill is critical for Great Panther to deliver production growth. As exploration on the property continues we will have a better idea of when/if the deposit will enter the production queue."
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