Thursday, 11 July 2013

Great Panther Q2 metal output rises 22% as cost reduction review continues

Great Panther Silver (TSE:GPR)(NYSE MKT:GPL) has reported an increase in second quarter production in both gold and silver, adding up to a 22 per cent rise in total metal production during the period at its two operating mines in Mexico. 
Shares of the Canadian silver company popped on the news, rising 6 cents, or more than 7.3 per cent, to 88 cents in early trading Thursday. 
The company's Guanajuato and Topia silver mines produced a record 680,212 silver equivalent ounces in the second quarter, up 22 per cent from the year earlier figure of 555,721 ounces. Pure silver output rose 6 per cent, while gold production increased a whopping 70 per cent to a record 3,994 ounces. 
The silver miner said it processed 28 per cent more ore compared to the same period last year, at 67,569 tonnnes. 
"Both Guanajuato and Topia rebounded from low grades in the first quarter of 2013 as a result of our ongoing focus on grade control," said president and CEO Robert Archer in the release Thursday. "As we continue to concentrate on improving efficiencies at the operations, the current emphasis is on site cost reductions and maintaining strong grade control, in light of lower metal prices." 
Indeed, he said non-essential budget items have been cut, while some capital expenses have been cut and deferred and corporate overheads lowered in order to conserve cash in an environment when miners are struggling to keep costs down as metal prices decline. "Directors and senior management have participated in these cuts through voluntary salary deferrals. Overall, these cuts will result in lower administrative, exploration and corporate development expenditures in the second half," Archer said. 
The company cautioned, however, that despite an improvement in grades over the first quarter, operating margins will remain weak for the second quarter due to the sharp drop in silver and gold prices over the period. 
It added that most of the concentrate sales in the second quarter will reflect production from the prior period at lower grades, expected to impact reported cash costs. 
At the Guanajuato mine complex, silver grades improved 8 per cent over the previous quarter, while gold grades improved 28 per cent over the period that ended in March. At Topia, silver grades improved 25 per cent over the first quarter, while gold grades dropped 12 per cent sequentially. 
The company said that management continues to conduct mine-by-mine reviews to determine the profitability of individual mines at Topia, trying to figure out where to best concentrate its efforts and reduce costs given the varying metal prices. So far, two of the 14 mines have been temporarily shut down, according to the Great Panther statement, supplemented with increased production at other "more profitable" mines. 
Great Panther also said it is making improvements to its Topia processing plant that will increase the crushing capacity, and reduce maintenance and electricity costs. 
Looking ahead, the company is on track to meet its guidance of 2.4 to 2.5 million silver equivalent ounces this year, it said, having produced 1.29 million ounces in the first half. Cash cost guidance for the year is being reviewed, however, in light of the significant drop in precious metals prices in the second quarter, with an update expected in early August. Gold prices dropped 12 per cent in June alone. 
In other news during the latest period, the miner received the land permit for its San Ignacio project, and submitted a revised environmental impact assessment, which it anticipates will be approved by the end of the third quarter. An infill drilling campaign is also expected to start in September at the site to better define the resource. 

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