Great Panther Silver anticipates further growth in 2011, releases Q2 results

Great Panther Silver (TSE:GPR) (AMEX:GPL) announced late Thursday that it can expect improved throughput and other operational efficiencies during the remainder of the year, following the release of new resource estimates for the San Ignacio and Guanajuatito areas of its Guanajuato mine in Mexico later in 2011.

Looking ahead, "The anticipated development of the San Ignacio Property combined with the improved mineral resources at Guanajuato and Topia support ongoing growth and increased throughput," the company said.

"Operating efficiencies will allow for further increases such that production upside will remain at both mines."

The company, which produces silver from its Guanajuato and Topia mines in Mexico, also announced second quarter results, which as expected, were impacted by delays in shipments of concentrate from its Guanajuato operation - a result of technical issues with the company's metal trader smelter.

"Following the strong financial performance we delivered in the first quarter, it is unfortunate that the delays in shipments of concentrate from our Guanajuato operation have impacted our revenue in the second quarter," said president and CEO, Robert Archer.

"However, we believe that the agreements we now have in place to secure future sales will remedy the situation and that the backlog of concentrate will be sold over the balance of the year at potentially higher metal prices.

"We have a strong balance sheet, our operations are more profitable than ever, and we are moving ahead with all of our expansion plans as previously outlined."

Indeed, for the three months ending June 30, the company's gross profit, or earnings from mining operations, increased 15% to $4.0 million, from $3.4 million a year earlier. The company improved plant throughput at both of its mining operations in Mexico by 30% to 56,643 tonnes during the quarter.

But due to the delay in shipping at Guanajuato, revenues dropped 8% to $8.6 million during the period.

Great Panther reported net income of $2.5 million, down from $4.4 million in the second quarter of 2010, when it received a one-time deferred income tax recovery of $3.1 million, it said.

Despite record production at its Topia mine, lower ore grades from Guanajuato caused overall metal production to edge down 2% to 562,944 silver equivalent ounces, as a 6% decline in silver production offset a 31% rise in gold output.

"The recent drop in ore grades at both operations is being addressed as the cost per ounce at both mines is sensitive to grade," the company said in a statement.

Cash costs per silver ounce, net of by-products, climbed 54% to US$11.84 due to the impact of higher metal prices and lower ore grades. Still, site unit costs per tonne of ore remained unchanged year-over-year.

Exploration drilling continues from surface at San Ignacio, and from underground at Rayas and Guanajuatito, all part of the Guanajuato mine complex.

Last month, the company purchased the new Santa Rosa silver-gold project, totaling 1,514 hectares, located roughly 10 to 15 kilometres northeast of Guanajuato, increasing land holdings in the area by 136%.

Great Panther, which recently closed a $24.2 million equity offering, finished the quarter with cash and equivalents of $37.7 million.