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Thursday, 14 March 2013
Great Panther sees record sales despite higher costs as operations improve
Great Panther Silver (TSE:GPR) (NYSE MKT: GPL) says it has trimmed its losses in the fourth quarter as revenue increased 2 percent, ending the year with record full year sales as production grew despite higher costs biting into profits.
For the quarter that ended December 31, the precious metals producer reported a net loss of $1.29 million, or 1 cent per share, compared to a loss of $1.42 million, or 1 cent per share, in the prior year period.
Gross profit, or earnings from its mining operations in Mexico, fell 45 percent to $3.32 million on lower metal prices and higher unit costs, though revenues increased to $17.79 million, from $17.52 million a year earlier on a boost in production.
The company produced a record 672,690 ounces of silver equivalent in the latest quarter, up 23 per cent from the year ago period, on the back of a 28 percent increase in pure silver output
Ore processed in the latest quarter increased 30 percent. Cash costs were higher, however, at $14.58 per silver ounce, compared to $11.92 a year earlier.
Average realized prices for silver rose 3 percent to $31.94 an ounce in the quarter, but declined 11 percent for the full year 2012 to $30.93 an ounce.
For the year, revenues rose 6 percent to a record $61.14 million as higher production and sales volumes offset a decline in metal prices, for a gross profit of $19.2 million. The company produced a record 2.38 million silver equivalent ounces last year, an increase of 8 percent from 2011.
"We are pleased to report record revenues and revenue growth of 6% despite a decline in average silver prices," said president and CEO Robert Archer in the statement late Wednesday.
"While we remained profitable, we saw a decrease in profitability due to lower metal prices, increases in our operating costs and greater expenditures in exploration and development activities."
The CEO said the additional expenses were not without results, as the company discovered new-silver gold mineralization at its Guanajuato Mine complex, and also developed underground infrastructure to connect the lower levels of the mine with the main ore shaft at Cata.
On a conference call this morning, president Martin Carsky said that while he is pleased with the performance at the company's two operating mines, he acknowledges that there is "still work to be done", with efforts to continue on making improvements to operations this year.
In addition to improving the operating efficiency of its two mines, Guanajuato and Topia, the company's focus in 2013 will also be on starting the development of its San Ignacio project in Mexico, in preparation for expected production next year.
Carsky also said that Great Panther is assessing several projects and acquisition opportunities, and will continue to do so until it finds "the right fit", with a focus on properties in Mexico and Peru.
At its existing operating mines, the company will look to leverage the additional capacity it built at both of its plants.
The Canadian miner plans to cut costs and spend less in capex this year, at roughly $20 million compared to nearly $27 million in 2012 in a bid to improve cash flows while funding its San Ignacio project, from where it expects to receive an environmental permit in the second quarter, after which the mining plan will be finalized.
"We have a clear path to achieve our operational and growth objectives for 2013, and have scaled back our growth forecast to focus on improving efficiencies," said Carsky on the conference call of investors, shareholders and media.
The company ended the year with $25.9 million in cash, with a net working capital position of $44.5 million.
For 2013, Great Panther says it expects to produce between 2.4 and 2.5 million silver equivalent ounces, at a cash cost of US$10 to US$11 per silver ounce, with the Guanajuato mine lowering cash costs due to its high gold content.
The silver and gold miner is also exploring its El Horcon project in the region, from where it expects to get a drilling permit in the second quarter.