(*** Adds CEO comments from conference call)
Mexico-focused Great Panther Silver (TSE:GPR) (AMEX:GPL) late Wednesday posted a 6 per cent decrease in third-quarter revenues year-over-year due mainly to a large in-transit shipment of concentrate, but processed ore increased by 9 per cent as metal production rose 22 per cent.
"Great Panther continues to enjoy a strong balance sheet and has made significant investments in our operations in 2012," said Great Panther Silver CEO Robert Archer.
"Grade variability continues to be a challenge at both mines, especially at Topia, and is a major focal point for our mine planners in order to reduce our unit cash costs going forward.
"Quarterly revenue was impacted by lower year-over-year metal prices and a large in-transit shipment of concentrate from Guanajuato, however the latter simply defers revenue recognition until the fourth quarter of 2012."
The company said that an in-transit shipment of concentrate at the end of the quarter accounted for the decrease in ounces sold, representing approximately 108,000 silver equivalent ounces (Ag eq oz) with an approximate revenue value of $3.3 million that will be recognized in the fourth quarter.
Revenues increased 6 per cent over the second quarter of 2012 due to higher metal prices and an increase in silver equivalent ounces sold.
Processed ore increased 9 per cent to 58,307 tonnes compared to the third quarter of 2011 and increased 10 per cent sequentially due to a concerted effort to increase production while metal production increased 22 per cent to 592,586 Ag eq oz compared to the third quarter of 2011 and increased 7 per cent over the second quarter of 2012.
Gold production increased 102 per cent to 3,015 ounces compared to the third quarter of 2011 and silver production increased 8 per cent to 371,857 ounces compared to the third quarter of 2011.
Great Panther Silver said that cash cost per silver ounce increased 46 per cent to $13.16 compared to the third quarter of 2011 due primarily to increased site labor and contractor operating costs.
For the third quarter, net income totalled $1.8 million, compared to $3.4 million for the same quarter in 2011. The decrease from the third quarter in 2011 was the result of decreased gross profit, increases in general and administrative expenses and an increase in exploration and evaluation expenses.
At September 30, 2012 the company said its net working capital position "remained strong" at $45.9 million, although it constituted a decrease compared to $49.9 million at June 30, 2012. The decrease from the prior quarter-end is accounted for by capital expenditures and increased inventories due primarily to the in-transit shipment at the end of the quarter.
In a conference call, Great Panther's Archer said that stockpiled ore at Topia should be processed by the end of the year and that permitting at San Ignacio is seen being completed by the first quarter of 2013.
In terms of M&A deals, Archer said: "We have not been in any discussions about being approached. Most of the things we're looking at have been of a private nature."
Commenting on the recently-acquired El Horcon Project, 60 km northwest of Guanajuato, Archer said the company was looking to start a drilling programme that targets 5,000 to 6,000 metres in the first quarter of 2013, which he budgeted at around $1 million in total.
Processed ore at Guanajuato increased 6 per cent over the third quarter of 2011 due in part to the move to a seven day work week for the Guanajuato mine operation; Guanajuato ore grades of 188 grams per tonne silver (g/t Ag) and 2.22 grams per tonne gold (g/t Au), or 321 g/t Ag eq were up 32 per cent over the third quarter of 2011.
The company said that Guanajuato achieved strong metallurgical recoveries of 90.9 per cent and 91.9 per cent for silver and gold respectively due largely to the addition of a re-grind mill earlier in the year.
Ore processed at Topia was up 22 per cent from the third quarter of 2011 to 14,593 tonnes due to the processing of some of the stockpiled ore from the first half of the year and Topia ore grades were down 19 per cent to 442 g/t Ag eq compared to the same period in the prior year.
Looking ahead, based on continued grade variability and higher smelting and refining charges which have resulted in higher unit operating costs, cash cost per silver ounce guidance has been adjusted to a range of $11.00 to $12.00 from a range of $9.50 to $10.50.
With the acquisition of key surface rights at San Ignacio, the company has applied for the permits required for underground development and permitting is expected to be completed by the first quarter of 2013. The construction of the portal and development of a ramp will commence immediately after the receipt of permits, the company said.
Great Panther added that continues to seek out opportunities to add production in the districts within which it is already operating.
Consequently, it expects to commence a drill program in the first quarter of 2013 with the goal of delineating a resource at the recently acquired El Horcon Project located 60 kilometres northwest of the Guanajuato mine.
Great Panther is a primary silver mining and exploration company focused on mining precious metals from its two wholly-owned operating mines in Mexico.
It also owns the development stage property San Ignacio, and an exploration stage property, Santa Rosa, which is located approximately 15 kilometres northeast of Guanajuato.
Full details of earnings can be found at: http://www.greatpanther.com
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